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Wealth Effects of International Acquisitions by US Banks

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  • Kimberly C. Gleason
  • Ike Mathur

Abstract

The wealth effects of international acquisitions by US banks (USBs) are examined in this study. The results show that shareholders of USBs experience significant negative excess returns when banks make international acquisition announcements. Excess returns are significantly negative when banks announce acquisitions in developed countries. The excess returns are not different for first time versus subsequent acquisition announcements. However, excess returns are significantly negative for USBs that are frequent acquirers overseas. Sampling by time periods, negative excess returns are observed during the fixed exchange rate regime (1965–1973) and during the post Tax Reform Act of 1986 era. Cross‐sectional regressions indicate that profitability and efficiency measures are positively associated with excess returns.

Suggested Citation

  • Kimberly C. Gleason & Ike Mathur, 1998. "Wealth Effects of International Acquisitions by US Banks," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 7(5), pages 54-69, December.
    • Handle: RePEc:wly:finmar:v:7:y:1998:i:5:p:54-69
    DOI: 10.1111/1468-0416.00025
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