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Market Response to Announcements of Mergers of Canadian Financial Institutions

Author

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  • Sebouh Aintablian

    (Lebanese American University, Lebanon)

  • Gordon S. Roberts

    (York University, Canada)

Abstract

This study examines a sample of mergers of Canadian Financial Institutions during the 1990’s to determine whether in-pillar, cross-pillar and foreign mergers are value-enhancing, and to determine possible sources of synergies behind those mergers. It develops testable hypotheses for Canadian FI mergers by synthesizing prior U.S. tests in the context of Canadian institutional arrangements. The overall results support the generality of findings of prior U.S. studies that the average abnormal return for both the acquiring and target firms is positive and statistically significant. This result suggests that acquisitions in the financial industry are, in Canada as elsewhere, driven by value-maximizing motivations. The study also shows that acquiring institutions’ shareholders benefit more when the acquisition is of a similar type (in-pillar) and domestic.

Suggested Citation

  • Sebouh Aintablian & Gordon S. Roberts, 2005. "Market Response to Announcements of Mergers of Canadian Financial Institutions," Multinational Finance Journal, Multinational Finance Journal, vol. 9(1-2), pages 72-98, March-Jun.
    • Handle: RePEc:mfj:journl:v:9:y:2005:i:1-2:p:72-98
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    2. Jie (Michael) Guo & Dimitris Petmezas, 2012. "What are the Causes and Effects of M&As? The UK Evidence," Multinational Finance Journal, Multinational Finance Journal, vol. 16(1-2), pages 21-47, March - J.

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    More about this item

    Keywords

    Bank merger announcements; Canada;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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