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Deal Size, Bid Premium, and Gains in Bank Mergers: The Impact of Managerial Motivations

  • Atul Gupta
  • Lalatendu Misra
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    Do mergers with greater target relative to acquirer size create more value than mergers with smaller relative sized targets? Do larger bid amounts represent wealth transfers from acquirers or do they signal greater expected merger gains? We hypothesize that the relations among aggregate merger gains, relative size, and bid premiums are asymmetric across mergers made by value-enhancing versus value-reducing managers. We use a large sample of bank mergers to test these predictions and find that the value response to different explanatory variables is asymmetric. Our findings provide new insights into how the market values merger bids. Copyright 2007, The Eastern Finance Association.

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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1540-6288.2007.00176.x
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    Article provided by Eastern Finance Association in its journal Financial Review.

    Volume (Year): 42 (2007)
    Issue (Month): 3 (08)
    Pages: 373-400

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    Handle: RePEc:bla:finrev:v:42:y:2007:i:3:p:373-400
    Contact details of provider: Web page: http://www.easternfinance.org/
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