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State-Owned Banks: Acquirers in M&A deals

Author

Listed:
  • Emanuele BACCHIOCCHI

    ()

  • Matteo FERRARI

    ()

  • Massimo FLORIO

    ()

  • Daniela VANDONE

    ()

Abstract

Between 2003 and 2013, according to Zephyr (BvD) data, 22% of M&A deals between banks have involved state-owned banks, either as targets (12%) or as acquirers (10%). The behavior of state-owned banks in the market control is, however, under-researched. The standard Inefficient Management Hypothesis suggests that more efficient managerial teams target less performing firms. The IMH, however, has never been tested for deals involving state-owned banks, nor the pre-deal operating characteristics of state-owned banks involved as acquirers in M&A deals. We build up a unique dataset of 3,682 deals between banks that allows us to classify M&As into four categories, depending on the ownership of the acquirer and the target: 1) public re-organization (deals between two state-owned banks), 2) publicization (a state-owned bank acquiring a private bank) 3) privatization and 4) private re-organization (deals between two private banks). Our findings confirms for the first time the IMH also for state-owned banks. We also find that state-owned banks active as acquirers in the market for corporate control have a better pre-deal performance compared to the private benchmark; this evidence is stronger for development banks.

Suggested Citation

  • Emanuele BACCHIOCCHI & Matteo FERRARI & Massimo FLORIO & Daniela VANDONE, 2015. "State-Owned Banks: Acquirers in M&A deals," Departmental Working Papers 2015-08, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  • Handle: RePEc:mil:wpdepa:2015-08
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    File URL: http://wp.demm.unimi.it/files/wp/2015/DEMM-2015_08wp.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Inefficient Management Hypothesis; Mergers & Acquisitions; State-owned banks; Ownership;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises

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