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Title: Bank mergers and acquisitions in the Asia-Pacific region

Bank mergers and acquisitions in the Asia-Pacific region

An investigation of the shareholder wealth effects of the financial sector consolidation and its impact on the acquirer’s cost of debt

by Sascha Kolaric (Author)
©2016 Thesis 189 Pages
Law, Economics & Management
Series: Corporate Finance and Governance, Volume 16

Summary

This book offers a comprehensive analysis of the shareholder wealth effects of the financial sector consolidation in the Asia-Pacific region and its impact on the acquirer’s cost of debt. By not only examining the capital market reactions to the institutions directly involved in M&A transactions, but also their closest rivals, it is possible to draw clearer conclusions in regard to the overall success of the financial sector consolidation in this region. In addition, by investigating the acquiring institution’s CDS market reaction to merger announcements, valuable insights are offered in regard to the difference between equity and debt market perceptions of bank M&As. The analyses suggest that equity and debt markets consider different factors when evaluating the success of mergers.

Table Of Contents

  • Cover
  • Title
  • Copyright
  • About the book
  • This eBook can be cited
  • Overview
  • Table of Content
  • List of tables
  • List of figures
  • List of abbreviations
  • 1. Introduction
  • 1.1 The importance and relevance of bank mergers and acquisitions in the Asia-Pacific region
  • 1.2 Thesis structure
  • 2. Literature review of the performance of bank mergers and acquisitions
  • 2.1 Scope of empirical research methodologies
  • 2.1.1 The event study methodology
  • 2.1.2 Dynamic efficiency studies
  • 2.1.3 Performance studies
  • 2.1.4 Evaluation of the different empirical methodologies
  • 2.2 Prior empirical research results on the success of bank mergers and acquisitions
  • 2.2.1 Evidence from United States event studies
  • 2.2.2 Evidence from European and worldwide event studies
  • 2.2.3 Research findings of dynamic efficiency studies
  • 2.2.4 Insights from performance studies
  • 2.2.5 The effects of bank mergers and acquisitions: Evidence from Asia
  • 2.3 Evaluation of the empirical findings
  • 2.4 Determinants of successful merger transactions in the financial sector
  • 2.4.1 Characteristics related to the acquirer or target
  • 2.4.2 Characteristics specific to the transaction
  • 2.4.3 Characteristics in regard to the regulatory and economic environment
  • 2.4.4 The influence of managers on the outcome of bank mergers
  • 2.4.5 Evidence on regulatory arbitrage and “Too-Big-to-Fail” bank mergers
  • 2.5 The wealth effects of mergers and acquisitions on industry rivals
  • 2.5.1 The Market Power Hypothesis
  • 2.5.2 The Efficiency Hypothesis
  • 2.5.3 The Acquisition Probability Hypothesis
  • 2.6 Assessment of the empirical findings on bank mergers and acquisitions
  • 3. The shareholder value effects of the financial sector consolidation in the Asia-Pacific region
  • 3.1 Related literature on wealth effects of the financial sector consolidation
  • 3.1.1 Bank mergers in advanced economies
  • 3.1.2 Bank mergers in emerging economies
  • 3.1.3 The rival effects of mergers and acquisitions
  • 3.2 Data set and methodology
  • 3.2.1 Bidder and target bank data selection and sample description
  • 3.2.2 Rival bank data selection and sample description
  • 3.2.3 Empirical methodology
  • 3.2.4 Significance tests
  • 3.3 Results of the empirical investigation
  • 3.3.1 Bidding bank performance in Asia-Pacific bank mergers and acquisitions
  • 3.3.2 Bidding bank rival performance in Asia-Pacific bank mergers and acquisitions
  • 3.3.3 Target performance in Asia-Pacific bank mergers and acquisitions
  • 3.3.4 Target rival performance in Asia-Pacific bank mergers and acquisitions
  • 3.4 Overall effects of financial sector consolidation in the Asia-Pacific region
  • 3.5 Determinants of the short-term market performance
  • 3.5.1 Factors influencing the bidding bank’s short-term market performance
  • 3.5.2 Bidding bank regression results
  • 3.5.3 Bidding bank rival regression results
  • 3.6 Robustness checks
  • 3.6.1 Difference in time periods
  • 3.6.2 Sensitivity analysis of the rival reactions
  • 3.6.3 Median regression on the short-term performance of bidding banks
  • 3.7 Evaluation of the shareholder wealth effects of the financial sector consolidation in the Asia-Pacific region
  • 4. The impact of bank mergers in the Asia-Pacific region on the acquiring institutions cost of debt
  • 4.1 Related literature on CDS spread changes and the effect of mergers on debtholders
  • 4.1.1 CDS event studies
  • 4.1.2 The effect of bank mergers and acquisitions on debtholders
  • 4.2 Data and empirical methodology
  • 4.2.1 The mergers and acquisitions data set
  • 4.2.2 The CDS data
  • 4.2.3 Empirical methodology
  • 4.3 The impact of merger announcements on bidder CDS spreads
  • 4.4 Determinants of the short-term CDS spread changes
  • 4.5 Robustness checks
  • 4.6 Evaluation of the impact of bank mergers on the acquirer cost of debt
  • 5. Concluding remarks
  • 5.1 Summary and discussion of the main results
  • 5.2 Limitations and avenues for future research
  • 6. Reference list
  • Appendix

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List of tables

Table 2-1: Descriptive overview of US event studies

Table 2-2: Average cumulative abnormal returns for US event studies

Table 2-3: Descriptive overview of European and worldwide event studies

Table 2-4: Average cumulative abnormal returns for European and worldwide event studies

Table 2-5: Overview of efficiency study results

Table 2-6: Overview of performance study results

Table 2-7: Summary of the main success factors for bank mergers and acquisitions

Table 3-1: Geographic distribution of acquiring and target nation

Table 3-2: Bidding bank sample description

Table 3-3: Target bank sample description

Table 3-4: Rival bank sample description

Table 3-5: Event study results for entire bidding bank sample

Table 3-6: Event study results for non-Asian and Asian bidding banks

Table 3-7: Event study results for all bidding bank rivals

Table 3-8: Event study results for non-Asian and Asian bidding bank rivals

Table 3-9: Event study results for entire exchange-listed target sample

Table 3-10: Event study results for exchange-listed targets by non-Asian and Asian bidders

Table 3-11: Event study results for all exchange-listed target rivals

Table 3-12: Event study results for non-Asian and Asian bidder target rivals

Table 3-13: Variable definition for the OLS regressions

Table 3-14: OLS regression results for bidding banks with CARj,[–1;1] as dependent variable

Table 3-15: OLS regression results for bidding banks with CARj,[–5;5] as dependent variable

Table 3-16: OLS regression results for bidding bank rivals

Table 3-17: Event study results for bidding banks 1995–2004 and 2005–2013

Table 3-18: Event study results for non-Asian bidding banks 1995–2004 and 2005–2013 ← 11 | 12 →

Table 3-19: Event study results for Asian bidding banks 1995–2004 and 2005–2013

Table 3-20: Event study results for top five bidding bank rivals

Table 3-21: Event study results for non-Asian and Asian top five bidding bank rivals

Table 3-22: Median regression results for bidding banks

Table 4-1: Overview of CDS event studies

Table 4-2: Descriptive statistics of the bidding bank sample

Table 4-3: Definition of rating classes

Table 4-4: Descriptive statistics of the CDS data by rating class

Table 4-5: CDS spread changes surrounding M&A announcements for all bidders

Table 4-6: CDS spread changes surrounding M&A announcements for Non-Asian and Asian bidders

Table 4-7: OLS regression results for bidding banks

Table 4-8: Constant mean model CDS spread changes surrounding the M&A announcement day

Table A-1: List of all M&A events

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List of figures

Figure 1-1:Bank M&A activity in Asia-Pacific, Europe, and the US 1995–2013

Figure 3-1:Bidding bank and bidding banks’ rivals ACARs surrounding the official M&A announcement date

Details

Pages
189
Publication Year
2016
ISBN (PDF)
9783653062687
ISBN (MOBI)
9783653953381
ISBN (ePUB)
9783653953398
ISBN (Softcover)
9783631670545
DOI
10.3726/978-3-653-06268-7
Language
English
Publication date
2015 (November)
Keywords
Capital market reactions borrowing costs bank acquisition
Published
Frankfurt am Main, Berlin, Bern, Bruxelles, New York, Oxford, Wien, 2015. 189 pp., 38 tables, 2 graphs
Product Safety
Peter Lang Group AG

Biographical notes

Sascha Kolaric (Author)

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Title: Bank mergers and acquisitions in the Asia-Pacific region