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Is M&A different during a crisis? Evidence from the European banking sector

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  • Beltratti, Andrea
  • Paladino, Giovanna

Abstract

The financial crisis has affected the landscape of the banking sector around the world. We use a sample of transactions taking place in Europe in 2007-2010 to study the acquirer’s stock price market reaction to announcements and completions of acquisitions. We find that there are no significant abnormal returns around the announcement of an acquisition while there are positive abnormal returns at completions. We study the cross-sectional determinants of abnormal returns and find that announcement returns are mainly explained by the acquirer bank characteristics, while completion returns depend on opacity of the target and in large part on the drop in volatility associated with a reduction of uncertainty.

Suggested Citation

  • Beltratti, Andrea & Paladino, Giovanna, 2011. "Is M&A different during a crisis? Evidence from the European banking sector," MPRA Paper 35065, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:35065
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    More about this item

    Keywords

    Mergers and Acquisitions; Banks; Opacity; Financial crisis;
    All these keywords.

    JEL classification:

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

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