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The choice of IPO versus M&A: evidence from banking industry

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  • Bill Francis
  • Iftekhar Hasan
  • Dona Siregar

Abstract

This study investigates factors influencing private banks' exit strategy between going public (Initial Public Offering (IPO)) and being a target in Merger and Acquisitions (M&A). Evidence indicates that a bank with high liquidity, operating in a geographical deregulatory environment is more likely to go for the M&A option. Larger and older institutions, improved economic environment, increased recent trend of choosing IPOs and smaller difference in premiums paid between the alternative choices are likely to encourage banks to opt for IPO as an exit strategy. We observe the existence of self-selection in making the exit choice and find that the average transaction value of bank IPOs (M&As) would have been higher (lower) had the banks chosen to engage in M&A (IPOs).

Suggested Citation

  • Bill Francis & Iftekhar Hasan & Dona Siregar, 2009. "The choice of IPO versus M&A: evidence from banking industry," Applied Financial Economics, Taylor & Francis Journals, vol. 19(24), pages 1987-2007.
    • Handle: RePEc:taf:apfiec:v:19:y:2009:i:24:p:1987-2007
    DOI: 10.1080/09603100903251262
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    Cited by:

    1. Denis Cormier & Daniel Coulombe & Luania Gomez Gutierrez & Bruce J. Mcconomy, 2018. "Firms in Transition: A Review of the Venture Capital, IPO, and M&A Literature," Accounting Perspectives, John Wiley & Sons, vol. 17(1), pages 9-88, March.
    2. Georgios Sermpinis & Serafeim Tsoukas & Ping Zhang, 2019. "What influences a bank's decision to go public?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 24(4), pages 1464-1485, October.

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