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Deal size, bid premium, and gains in bank mergers: The impact of managerial motivations

  • Atul Gupta

    (Bently College)

  • Bently Lalatendu Misra

    (University of Texas at San Antonio)

Registered author(s):

    Do relatively large mergers create more value? Do larger bid amounts represent wealth transfer or do they digmal larger expected merger gains? We hypothedize that the relationship between aggregate merger gains, dela size,and bid premiums is asymmetric across merfers 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 theh market values merger bids.

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    File URL: http://www.business.utsa.edu/wps/fin/0004FIN-092-2007.pdf
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    Paper provided by College of Business, University of Texas at San Antonio in its series Working Papers with number 0004.

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    Length: 42 pages
    Date of creation:
    Date of revision:
    Handle: RePEc:tsa:wpaper:0004
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    1. Hughes, Joseph P. & Lang, William W. & Mester, Loretta J. & Moon, Choon-Geol & Pagano, Michael S., 2003. "Do bankers sacrifice value to build empires? Managerial incentives, industry consolidation, and financial performance," Journal of Banking & Finance, Elsevier, vol. 27(3), pages 417-447, March.
    2. Kathy Czyrnik & Linda Schmid Klein, 2004. "Who Benefits from Deregulating the Separation of Banking Activities? Differential Effects on Commercial Bank, Investment Bank, and Thrift Stock Returns," The Financial Review, Eastern Finance Association, vol. 39(2), pages 317-341, 05.
    3. Cornett, Marcia Millon & Hovakimian, Gayane & Palia, Darius & Tehranian, Hassan, 2003. "The impact of the manager-shareholder conflict on acquiring bank returns," Journal of Banking & Finance, Elsevier, vol. 27(1), pages 103-131, January.
    4. Becher, David A., 2000. "The valuation effects of bank mergers," Journal of Corporate Finance, Elsevier, vol. 6(2), pages 189-214, July.
    5. Cornett, Marcia Millon & McNutt, Jamie John & Tehranian, Hassan, 2006. "Performance Changes around Bank Mergers: Revenue Enhancements versus Cost Reductions," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(4), pages 1013-1050, June.
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