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