S/F/32. Dissertation. Mergers and Acquisitions in Bank Holding Companies: Shareholder Value Creation and the Importance of Organizational Fit

Firstly, the dissertation examines the valuation effects of acquisition announcements on the stock price of a nineteen-member sample of bank holding companies between 1996 and 2004. It finds that, overall, bank mergers destroy wealth for the shareholders of the acquiring company. On average, acquiring companies stock prices decline by 4% over a sixteen-day (-10, +5) event window. The results are statistically significant to 5%. There is, however, a large individual variance in results. Secondly, the dissertation investigates the power of organizational fit as an explanatory variable for M&A performance. Organizational fit is measured by two variables; relative age, and relative size. The cumulative average abnormal return (CAAR) experienced over the sixteen-day event window, is used for the dependant variable for M&A performance, and regressed against the organizational fit metrics. Relative age is found to not have a statistically significant effect on CAAR; relative size is statistically significant to 10%, and explains 19% of the variance of CAAR.