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US Evidence on Bank Takeover Motives: A Note

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  • Hao Zhang

Abstract

Existing studies on bank takeovers have not been able to distinguish among the three competing motives: synergy, agency, and hubris. This paper distinguishes the three competing motives by examining the relations between target gains and total gains and between acquirer gains and target gains. Empirical results show that bank takeovers are primarily motivated by synergy, although there is also strong evidence of hubris. Our results also suggest that hubris may explain the positive target gains and zero or negative acquirer gains found in this and many other bank takeover studies. Lastly, evidence exists to suggest that agency, along with hubris, may explain takeovers with negative total gains (JEL G21, G34).

Suggested Citation

  • Hao Zhang, 1998. "US Evidence on Bank Takeover Motives: A Note," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(7‐8), pages 1025-1032, September.
    • Handle: RePEc:bla:jbfnac:v:25:y:1998:i:7-8:p:1025-1032
    DOI: 10.1111/1468-5957.00224
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    Cited by:

    1. Bozos, Konstantinos & Koutmos, Dimitrios & Song, Wei, 2013. "Beta risk and price synchronicity of bank acquirers’ common stock following merger announcements," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 27(C), pages 47-58.
    2. Churyk, Natalie Tatiana, 2005. "Reporting goodwill: are the new accounting standards consistent with market valuations?," Journal of Business Research, Elsevier, vol. 58(10), pages 1353-1361, October.

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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