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Common Stock Returns in Corporate Takeover Bids: The Case of Brokerage House Acquisitions

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  • Davidson, Wallace N, III
  • Hatfield, Gay
  • Glascock, John L

Abstract

This paper examines the common stock returns of three groups of bidders that purchased brokerage houses. Only in the cases of horizontal mergers, one brokerage house purchasing another, are there abnormal returns associated with the purchase. Neither bank holding company bidders nor non-financial bidders gain significantly when purchasing a brokerage house. Bank holding company bidders face considerable regulatory delays, and these economic disturbances may eliminate their gains. Bank holding company expansion into these non-bank activities does not appear, at the time of announcement, to either hurt or benefit them; hence, this expansion does not appear to further the loss exposure of the Federal Deposit Insurance Corporation. Copyright 1994 by MIT Press.

Suggested Citation

  • Davidson, Wallace N, III & Hatfield, Gay & Glascock, John L, 1994. "Common Stock Returns in Corporate Takeover Bids: The Case of Brokerage House Acquisitions," The Financial Review, Eastern Finance Association, vol. 29(1), pages 77-96, February.
    • Handle: RePEc:bla:finrev:v:29:y:1994:i:1:p:77-96
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    Cited by:

    1. Carow, Kenneth A. & Kane, Edward J., 2002. "Event-study evidence of the value of relaxing long-standing regulatory restraints on banks, 1970-2000," The Quarterly Review of Economics and Finance, Elsevier, vol. 42(3), pages 439-463.
    2. Sebouh Aintablian & Gordon S. Roberts, 2005. "Market Response to Announcements of Mergers of Canadian Financial Institutions," Multinational Finance Journal, Multinational Finance Journal, vol. 9(1-2), pages 72-98, March-Jun.

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