Strategic and financial similarities of bank mergers

2016 ◽  
Vol 26 (1) ◽  
pp. 50-68 ◽  
Author(s):  
Sony Kuriakose ◽  
Justin Paul
Keyword(s):  
Mergers And Acquisitions ◽  
Design Methodology ◽  
Banking Sector ◽  
Relative Size ◽  
Transformation Process ◽  
Adverse Impact ◽  
Bank Mergers ◽  
Financial Leverage ◽  
Content Type ◽  
Bank Merger

Purpose – Consolidation through mergers and acquisitions indicates one of the major outcomes of the financial transformation process and contemporary trend in the Indian banking sector. Literature suggests that the pre-merger financials of banks are crucial in deciding the post-merger performance of merged entities. In this context, the aim of the present study is to provide insights on the strategic and financial similarities of merging partners in the bank mergers that occurred in the post-liberalization India. Design/methodology/approach – This paper considers all bank merger deals in the post-liberalization period, which involve purchase consideration either in the form of stock or cash. Hypotheses about the strategic similarities and dissimilarities are tested. The study considers all important aspects such as relative size of targets, diversity of earnings, efficiency, financial leverage, prudential norms and profitability. Findings – The study finds that banks are dissimilar in most of the key areas, and these might have an adverse impact on the post-merger performance. Originality/value – The study is original because we take into account all the bank merger deals in the period, which involve purchase consideration either in the form of stock or cash.

scholarly journals Do mergers and acquisitions affect information asymmetry in the banking sector?

2020 ◽  
Vol 46 (12) ◽  
pp. 1521-1547
Author(s):  
John S. Howe ◽  
Thibaut G. Morillon
Keyword(s):  
Mergers And Acquisitions ◽  
Information Asymmetry ◽  
Design Methodology ◽  
Banking Sector ◽  
Policy Makers ◽  
Content Type ◽  
Deal Completion ◽  
Asymmetry Measures ◽  
The Impact

PurposeThis paper aims to investigate the consequences of mergers and acquisitions (M&As) on information asymmetry in the banking sector. Specifically, the authors look at whether specific firm or deal characteristic influence information asymmetry levels between insiders and investors, as well as the impact of recent regulation such as the Dodd–Frank Act.Design/methodology/approachThe authors decompose the M&A process into three periods (pre-announcement, negotiation and post-completion period) and document changes in the information asymmetry levels between insiders and investors through the M&A process. The authors capture changes in information asymmetry using six different spread-based information asymmetry measures.FindingsThe authors find evidence that information asymmetry increases following M&A announcement and decreases following deal completion. These findings are more pronounced for acquisitions involving a private target, all-cash deals and for mergers, as opposed to acquisition of assets. We find that overall, successful mergers improve the quality of the information environment, while failed deals degrade it. Additionally, the enactment of Dodd–Frank reduced the magnitude of the changes in information asymmetry during the M&A process. The results are important to regulators, policy makers and investors.Originality/valueTo authors’ knowledge, this is the first study that looks at the effect of bank M&As on information asymmetry as well as the effect of regulations on information asymmetry.

Announced versus canceled bank mergers and acquisitions

2016 ◽  
Vol 17 (5) ◽  
pp. 510-544 ◽  
Author(s):  
Armin Varmaz ◽  
Jonas Laibner
Keyword(s):  
Mergers And Acquisitions ◽  
Shareholder Value ◽  
Abnormal Returns ◽  
Bank Mergers ◽  
Cross Sectional ◽  
Market Reactions ◽  
Content Type ◽  
European Bank ◽  
Long Time ◽  
Loan Losses

Purpose This paper aims to empirically analyze the success of European bank mergers and acquisitions (M&As) by an analysis of the shareholder value implications of stock market reactions to announced and canceled M&As in the period from 1999 to 2015. Design/methodology/approach The analysis of a sample of 467 announced and 54 canceled European bank M&As is conducted using event study methodology. The determinants of the shareholder value creations in M&A are observed in cross-sectional regressions. The likelihood of M&As being canceled is estimated in logit regressions. Findings The paper finds that European bank M&As have not been successful in terms of shareholder value creation for acquiring banks, whereas targets experienced significant value gains. Abnormal returns for bidders and targets exhibit the same characteristics upon the announcement of M&As that are canceled at a later date, whereas the results for transaction cancelations deviate. Targets experience negative abnormal returns at a larger size than upon the transaction announcement. The findings for bidders are striking, as they destroy shareholder value upon the transaction cancelation, also, consequently they suffer twice. In particular, banks with higher profitability, higher efficiency and lower liquidity experience negative abnormal returns around the announcement dates. Negative abnormal returns prior to the transaction announcement and provision for loan losses increase significantly the likelihood of M&A cancelation. Originality/value This paper contributes to the literature expanding existing analyses to the shareholder value implications of canceled European bank M&As in a 17-year long time period. The findings reveal the destructive characteristics of canceled bank M&As and provide innovative insights into European capital market reaction to canceled M&As.

Bank mergers and acquisitions in Greece: the financial crisis and its effect on shareholder wealth

2019 ◽  
Vol 16 (2) ◽  
pp. 273-296 ◽  
Author(s):  
Ioannis Tampakoudis ◽  
Michail Nerantzidis ◽  
Demetres Subeniotis ◽  
Apostolos Soutsas ◽  
Nikolaos Kiosses
Keyword(s):  
Financial Crisis ◽  
Mergers And Acquisitions ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Shareholder Wealth ◽  
Conclusive Evidence ◽  
Wealth Effects ◽  
Bank Mergers ◽  
Content Type ◽  
The Impact

Purpose The purpose of this paper is to investigate the wealth implications of bank mergers and acquisitions (M&As) in the unique Greek setting given the triple crisis phenomenon – banking, sovereign debt and economic crises – that prevailed after the global financial crisis. Design/methodology/approach The study examines bank M&As and bank transactions over the period from 1997 to 2018, as well as government-assisted M&As during the crisis. The wealth effects of bank M&As are assessed using both univariate and multivariate frameworks. Findings Findings show a neutral crisis effect on the valuation of M&As upon their announcement. However, the authors provide conclusive evidence that M&A completions are value-destroying events for acquiring banks during the crisis, far worse than in the pre-crisis period. Greek banks also fail to create value from government-assisted mergers. The results suggest that the financial stability and the prevention of further deepening of the Greek crisis with possible contagion effects were achieved at the expense of shareholders and taxpayers. Originality/value To the authors’ knowledge, this is the first study that examines the impact of the Greek triple crisis on the wealth effects of bank M&As and bank transactions. Also, the study provides first evidence with regard to the economic impact of government-assisted M&As in the European context.

scholarly journals The tax gap as a public management instrument: application to wealth taxes

2019 ◽  
Vol 27 (81) ◽  
pp. 207-225
Author(s):  
José M. Durán-Cabré ◽  
Alejandro Esteller Moré ◽  
Mariona Mas-Montserrat ◽  
Luca Salvadori
Keyword(s):  
Public Management ◽  
Design Methodology ◽  
Relative Size ◽  
Tax Compliance ◽  
Content Type ◽  
Tax Gap ◽  
Wealth Tax ◽  
The Difference ◽  
Gift Tax ◽  
Over Time

Purpose The purpose of this paper is to study the concept of tax gap, that is the difference between the total amount of taxes collected and the total tax revenues that would be collected under full tax compliance. Design/methodology/approach The authors also present the methodology to estimate the gap for two taxes levied on wealth: the wealth tax and the inheritance and gift tax; both are administered in Spain by the regional tax authorities. Findings The authors point out that its estimation offers useful information about the relative size and nature of non-compliance, as well as its evolution over time. Likewise, the tax gap is a valuable instrument not only to define enforcement strategies of the tax administration but also to enhance its accountability. Nonetheless, the methodology used to estimate the tax gap and, consequently, the interpretation of the results is subject to limitations that are discussed in the paper. Originality/value Finally, the paper provides the results of the estimations obtained from using microdata: 44.34 per cent gap in the wealth tax and 41.26 per cent in the inheritance and gift tax.

Beyond placement, layering and integration – the perception of trade-based money laundering risk in UK financial services

2019 ◽  
Vol 22 (4) ◽  
pp. 614-625 ◽  
Author(s):  
Mario Menz
Keyword(s):  
Money Laundering ◽  
Financial Services ◽  
Design Methodology ◽  
Banking Sector ◽  
Trade Finance ◽  
Content Type ◽  
Proceeds Of Crime ◽  
The Uk ◽  
Practical Implications ◽  
Insight Into

Purpose The purpose of this study was to investigate the perception of trade-based money laundering in Letters of Credit (“L/C”) transactions among trade finance practitioners in the UK banking sector and to compare it to the perception of the same risk by the Financial Conduct Authority (“FCA”), the regulator of the UK’s banking sector. Design/methodology A survey was used to carry out research among financial services professionals engaged in trade finance in the UK. Findings This paper contributes to the existing literature in a number of ways. First, it investigates the perception of trade-based money laundering risk from the perspective of financial services professionals, which has not previously been done. Second, it argues that the perception of trade-based money laundering in financial services is overly focussed on placement, layering and integration, and that the full extent of the offence under the Proceeds of Crime Act 2002 is less well known. It further found that financial services firms need to improve their understanding of the nature of trade-based money laundering under UK law. Practical implications This study argues that the financial services sector’s perception of trade-based money laundering risk in trade finance is underdeveloped and makes suggestions on how to improve it. Originality/value It provided unique insight into the perception of trade-based money laundering risk among financial services professionals.

scholarly journals Transformation to self-managing teams: lessons learned

2018 ◽  
Vol 17 (2) ◽  
pp. 81-84 ◽  
Author(s):  
Maarten Renkema ◽  
Tanya Bondarouk ◽  
Anna Bos-Nehles
Keyword(s):  
Design Methodology ◽  
Systematic Approach ◽  
Transformation Process ◽  
Healthcare Organization ◽  
Lessons Learned ◽  
Self Management ◽  
Content Type ◽  
Management Board ◽  
Stakeholder Groups

Purpose Although self-management is not a new phenomenon, there is a lack of understanding about how to transform organizations towards self-managing teams (SMTs). The purpose of this paper is to propose a guiding framework for how the empowerment process can be managed. Design/methodology/approach The paper sets out 12 guidelines on how to address the transition towards SMTs based on a case study at a large Dutch healthcare organization. The lessons are drawn from observations, documents and more than 55 interviews with key informants. Findings This paper provides a holistic overview of lessons learned from the transformation process towards SMTs. The 12 recommendations are targeted at four stakeholder groups, namely, the management/board, HRM department, coach-managers and members of the SMTs. Originality/value The originality lies in the systematic approach including lessons learned for all levels of the organization.

Three-dimensional sustainability of Kaizen

2018 ◽  
Vol 30 (4) ◽  
pp. 391-408 ◽  
Author(s):  
Jesus Mendez ◽  
Mercedes Vila-Alonso
Keyword(s):  
Design Methodology ◽  
Three Dimensional ◽  
Well Being ◽  
Transformation Process ◽  
First Century ◽  
Content Type ◽  
Analytical Technique ◽  
Know How ◽  
Practical Implications

Purpose The purpose of this paper is to know, from a three-dimensional perspective (operational, emotional and behavioral), the process of “putting down roots” related with the implementation of Kaizen until it becomes sustainable. The research aims to know how this “putting down roots” process is carried out, what transformations occur, what elements are involved and what role they represent in achieving sustainability. Design/methodology/approach For this purpose, a methodology based on the case study has been used, an interpretive approach to reality has been adopted as a paradigm and the Grounded Theory has been applied as an analytical technique. Findings The results suggest the existence of a transformation process that leads to creating new habits, beliefs and feelings, a phenomenon that the authors identify as a three-dimensional learning process (operational, emotional and behavioral). Practical implications This type of learning is perceived as a transition toward an organizational culture that ensures the roots of the Kaizen principles, which is essential for its sustainability and which favors the creation of talent and the well-being of employees, two challenges that the Kaizen of the twenty-first century must face. Originality/value The document includes innovative contributions to the Kaizen sustainability phenomenon, as it is dealt with from a three-dimensional perspective that underlies the inhibitors and enablers known in the current literature.

Segmentally aware: know when to merge and when to purge

2019 ◽  
Vol 33 (1) ◽  
pp. 196-214
Author(s):  
Yao Ma ◽  
Jiahua Xu
Keyword(s):  
Mergers And Acquisitions ◽  
Financial Performance ◽  
Design Methodology ◽  
Content Type ◽  
Structural Integration ◽  
Target Company ◽  
Overall Performance ◽  
Post Merger Integration ◽  
Merger Integration ◽  
Integration Levels

Purpose The purpose of this paper is to hone in on the degree of segment-level integration relative to corporate post-merger performance. Design/methodology/approach The sample consists of 89 segments in 29 combined companies resulting from large mergers and acquisitions (M&A) transactions between 2001 and 2014 in the pharmaceutical and chemical industries worldwide. The authors track the change through M&A in performance of segments with different integration forms as well as performance of entire companies with different integration levels. Findings The authors find that integrating the segments from the target significantly improves the acquirer’s overall performance, as well as the concerned segments’ performance, following an M&A transaction. Whereas the segments from the target company, when left unintegrated, not only exhibit subpar performance among all the segments, but also appear responsible for the worsening corporate performance. Various possible reasons for this contrast are discussed. Originality/value This paper raises awareness of the significance of segment-level analyses, and contributes to the post-merger integration (PMI) research by examining the influence of structural integration on operating segments. To the best of our knowledge, this paper is the first to investigate integration forms and the post-merger financial performance of various segments within companies.

The core potential of mergers and acquisitions to boost profits and research and development innovation

2018 ◽  
Vol 34 (11) ◽  
pp. 14-16
Keyword(s):  
Mergers And Acquisitions ◽  
Knowledge Creation ◽  
Design Methodology ◽  
Reading Time ◽  
Acquisition Time ◽  
Content Type ◽  
The Core ◽  
Pertinent Information ◽  
Time Frames ◽  
Practical Implications

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings This research paper concentrates on how M&As deliver increased profits and R&D intensity across varying post-acquisition time frames. The human mechanics beneath these achievements reveal that savvy knowledge creation and integration is crucial for extracting lasting value from an M&A. Originality/value The briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

scholarly journals Role of organizational career websites for employer brand development

2019 ◽  
Vol 27 (1) ◽  
pp. 149-168 ◽  
Author(s):  
Priya Gunesh ◽  
Vishwas Maheshwari
Keyword(s):  
Undergraduate Students ◽  
Design Methodology ◽  
Banking Sector ◽  
Structured Interviews ◽  
Employer Branding ◽  
Content Type ◽  
Brand Development ◽  
Employer Brand ◽  
Purposive Sample

PurposeThe paper aims to demonstrate the utilization of banks’ career website for publicizing the employer branding strategy to enable effective strategic talent relationship management through talent attraction, engagement and retention.Design/methodology/approachA qualitative approach using purposive sample comprising HR professionals involving HR directors, reward managers and talent relationship managers, participated in semi-structured interviews.FindingsThis paper provides empirical insights on the use of career websites to disseminate the employer brand. The findings reveal the presence of recruitment orientation career websites across the banking sector. It also conveys HR practitioners’ suggestions for revamping the banks’ career websites to a more screening orientation approach for greater interactivity by both the internal and external talent pools.Research limitations/implicationsThe paper depicts the importance attributed around the utilization of career websites in promoting the employer brand by the HR community across the banking sector. It provides clear insights about the specific contents of career websites to enable sustainable talent attraction, engagement and retention.Originality/valueThis paper provides a qualitative insight to the study of employer branding and career websites. Whereas most previous research on career websites have been of a quantitative nature relying predominantly on fictitious websites, having mostly undergraduate students as research participants. This study contributes enormously to the existing literature and practice by unveiling the perceptions of HR professionals on the dissemination of the employer brand through the career website.

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