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Shareholders wealth effects and intra-industry signals from European financial institution consolidation announcements

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  • Nickolaos V. Tsangarakis
  • Hlias K. Tsirigotakis
  • Emmanuel D. Tsiritakis

Abstract

This study examines shareholder wealth effects and intra-industry signals of consolidation announcements in the European financial sector over the period 2000 to 2006. Results show that announcements generate strong positive valuation effects for targets that become higher in cross-border and small value deals, and are negatively related to their relative size and prior performance. Evidence of acquirer returns is mixed depending on value size, geographic location and legal status of the deal, while returns of combined entities are mostly positive. Our findings provide preliminary evidence that European consolidation announcements transmit intra-industry signals that may encourage or discourage future takeover deals through the revaluation of other similar European financial institutions that are considered prospective targets 'rival financial institutions'.

Suggested Citation

  • Nickolaos V. Tsangarakis & Hlias K. Tsirigotakis & Emmanuel D. Tsiritakis, 2013. "Shareholders wealth effects and intra-industry signals from European financial institution consolidation announcements," Applied Financial Economics, Taylor & Francis Journals, vol. 23(23), pages 1765-1782, December.
    • Handle: RePEc:taf:apfiec:v:23:y:2013:i:23:p:1765-1782
    DOI: 10.1080/09603107.2013.848027
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    References listed on IDEAS

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    1. Christoph Walkner & Jean-Pierre Raes, 2005. "Integration and consolidation in EU banking - an unfinished business," European Economy - Economic Papers 2008 - 2015 226, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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    Cited by:

    1. Toumi Hassen & Issaoui Fakhri & Ammouri Bilel & Touili Wassim & Hamdi Faouzi, 2018. "Dynamic Effects of Mergers and Acquisitions on the Performance of Commercial European Banks," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(3), pages 1032-1048, September.
    2. Tampakoudis, Ioannis & Nerantzidis, Michail & Eweje, Gabriel & Leventis, Stergios, 2022. "The impact of gender diversity on shareholder wealth: Evidence from European bank M&A," Journal of Financial Stability, Elsevier, vol. 60(C).

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