Banking Acquisitions: Acquirer and Target Shareholder Returns

Abstract

banking mergers and acquisitions. In addition, the failure of the Justice Department and the courts to support and uphold the potential competition doctrine has influenced the Federal Reserve's guidelines for approving bank mergers, and more mergers have resulted (see Winer [16]). Previously most banking mergers and acquisitions involved the acquisition of relatively small banks that had no publicly traded stock. However, the increasing number of large acquisitions in recent years now allows the study of their effects on public shareholders. This paper examines the effects on shareholder returns of merger or acquisition announcements for individual banks and bank holding companies. The stockholder returns of matched banking acquirers and targets are analyzed to determine whether abnormal returns result from these announcements.