Date of Award
12-2004
Degree Type
Dissertation
Degree Name
Ph.D.
Degree Program
Financial Economics
Department
Economics and Finance
Major Professor
Hassan, M. Kabir
Second Advisor
Davis, Ronnie
Third Advisor
Varela, Oscar
Fourth Advisor
Wei, Peihwang
Fifth Advisor
Mukherjee, Tarun
Abstract
This dissertation examines the wealth effects of bank mergers on bidder, target, and combined firm shareholders for a sample of 785 mergers during the period 1980-2000. The dissertation employs two unique bank event study methodologies to calculate abnormal returns for bidder, target and combined firms. The first methodology is a modified market model that controls for shocks common to the banking industry. The second is an EGARCH (1,1) model that adjusts for the violated regression assumptions of the traditional market model event study. Namely, it controls for the linearity assumption, heteroskedasticity, and the correlation in the error term. The results of both methodologies reveal that target shareholders enjoy significantly positive abnormal returns, whereas the bidder shareholders experience significantly negative abnormal returns. Overall, announcements of bank mergers generate positive wealth effects for the combined shareholders. However, the evidence presented in this dissertation, to some extent, underscores the importance of the choice of models describing stock returns in examining the impact of bank mergers. In addition, when mergers are analyzed to determine the effects of relative size and relative book-to-market values, we find evidence that the relative size significantly affects the target, bidder and combined firm return; method of payment is also found to be significant in abnormal returns. Moreover, we find that the number of bidders affects only the bidder returns, while book-tomarket values are irrelevant factors. Availability Restricted: Release the entire work for campu
Recommended Citation
Al-Sharkas, Adel, "Short-Term, Long-Term, and Efficiency Impacts of Recent Mergers and Acquisitions in the U.S. Banking Industry" (2004). University of New Orleans Theses and Dissertations. 208.
https://scholarworks.uno.edu/td/208
Rights
The University of New Orleans and its agents retain the non-exclusive license to archive and make accessible this dissertation or thesis in whole or in part in all forms of media, now or hereafter known. The author retains all other ownership rights to the copyright of the thesis or dissertation.