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The determinants of failed takeovers in the banking sector: Deal or country characteristics?

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  • Caiazza, Stefano
  • Pozzolo, Alberto Franco

Abstract

The consolidation process which characterized the banking industry in the last decades has been widely analyzed, but very few studies have investigated the reasons which bring a number of announced deals to failure. We fill this gap in the literature analyzing the characteristics of failed M&A operations in a large sample, including all the major domestic and cross-border deals in the banking sector announced worldwide between 1992 and 2010. The results show that the most important factors which determine the failure of an announced operation are deal specific characteristics, in particular the hostility of the bidder and the presence of multiple potential acquirers. Moreover, lengthier negotiations have a lower probability of success. Contrary to expectations, cross-border operations are more likely to be successfully completed than domestic ones.

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  • Caiazza, Stefano & Pozzolo, Alberto Franco, 2016. "The determinants of failed takeovers in the banking sector: Deal or country characteristics?," Journal of Banking & Finance, Elsevier, vol. 72(S), pages 92-103.
    • Handle: RePEc:eee:jbfina:v:72:y:2016:i:s:p:s92-s103
    DOI: 10.1016/j.jbankfin.2016.04.011
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    4. Rexford Attah‐Boakye & Yilmaz Guney & Elvis Hernandez‐Perdomo & Johnathan Mun, 2021. "Why do some merger and acquisitions deals fail? A global perspective," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 4734-4776, July.
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    More about this item

    Keywords

    M&As; Bank; Abandoned deals; Failed takeovers;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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