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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Bibliographic Details
Published inJournal of banking & finance Vol. 135; p. 105576
Main Authors Leledakis, George N., Pyrgiotakis, Emmanouil G.
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.02.2022
Subjects
Dodd-Frank regulation
Event study
Financial performance
Shareholder wealth
Shareholder wealth
Financial performance
G21
G34
G14
Event study
G28
Dodd-Frank regulation
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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.
ISSN:0378-4266
1872-6372
DOI:10.1016/j.jbankfin.2019.06.008