U.S. bank M&As in the post-Dodd–Frank Act era: Do they create value?
We analyze the impact of the Dodd–Frank Act on the shareholder wealth gains using a sample of 640 completed U.S. M&As announced between 1990 and 2014. Our results indicate a positive DFA effect on announcement period abnormal returns in small bank mergers. In fact, mergers with combined firm ass...
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Published in | Journal of banking & finance Vol. 135; p. 105576 |
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Main Authors | , |
Format | Journal Article |
Language | English |
Published |
Elsevier B.V
01.02.2022
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Subjects | |
Online Access | Get full text |
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Summary: | We analyze the impact of the Dodd–Frank Act on the shareholder wealth gains using a sample of 640 completed U.S. M&As announced between 1990 and 2014. Our results indicate a positive DFA effect on announcement period abnormal returns in small bank mergers. In fact, mergers with combined firm assets of less than $10 billion create more shareholder value after the DFA, than ever before. This positive announcement effect in small deals appears to be linked with merger-related compliance cost savings and profitability improvements. By examining long-run abnormal returns, we find that the documented DFA effect on small deals announcement abnormal returns does not disappear overtime. Finally, we do not find such effects for non-U.S. bank M&As over the same period. |
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ISSN: | 0378-4266 1872-6372 |
DOI: | 10.1016/j.jbankfin.2019.06.008 |