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The research as defined examines M&A of the banking industry in both the US and EU banking industry - Dissertation Example
Finance & Accounting
Pages 16 (4016 words)
Date DATA AND METHODOLOGY Data sample The research as defined examines M&A of the banking industry in both the US and EU banking industry that has lead to the formation of mega banks in the mentioned regions (Amihud & Travlos, 1990)…
On the date when an M&A are, announced stock prices normally jump abnormally from the acquiring bank to the target company (Banerjee & Cooperman, 2000). In addition, M&A’s which resulted into the creation of diversification of the business in which the banks operate resulted into very high returns. However, other M&A types resulted neither into creation nor into destruction of the shareholders’ wealth or share values. This is majorly due to the sole reason that stock prices alone cannot be used to depict the value that is created by a merger and acquisition. Therefore, Accounting performance technique and stock prices analysis will be employed to help in the understanding the likelihood of stability of value creation (Banerjee & Cooperman, 2000). There are various reasons for merger and acquisitions with value creation being the major or primary reason. Other cases present other banks to merge or acquire with the others if they consider the others as having potential for potential gains in the future. Some instances, partners to an M&A found themselves in the situation after they were salvaged from financial crisis hence M&A was a solution to their predicaments resulting into such companies being for good bargains once their financial problems are taken care of by the M&A arrangements. ...
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