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Drivers of Shareholder Value Creation in M&A: Event Study of the European Banking Sector in the Post-financial Crisis Era

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Creating Value and Improving Financial Performance

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Abstract

The paper investigates the factors driving shareholder value creation following extraordinary financial transactions in the European banking sector after the 2007–2008 crisis. The study analyzes a sample of transactions between commercial banks announced between 2010 and 2020, to verify whether these acquisitions resulted in the creation of value for acquirers. It is found positive and statistically significant abnormal returns for the acquirers at the time of announcement. When identifying some aspects of the target that influence the returns, the study tests whether the market, in a period of crisis, recognizes a premium if the target is “good.” The paper finds that the market valorizes target companies with low NPL ratios, high levels of capitalization with respect to the credit granted, and balanced exposure to interest rates.

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Notes

  1. 1.

    Leledakis and Pyrgiotakis (2019), Kyriazopoulos and Drymbetas (2015), Beltratti and Paladino (2013).

  2. 2.

    Hagendorff et al. (2008); Campa and Hernando (2006).

  3. 3.

    Hagendorff et al. (2008) found a significant inverse relationship between the CAR and EPS of the target; Kyriazoupoulos (2016) found a non-significant positive relationship with ROE.

  4. 4.

    DeYoung et al. (2009); Leledakis and Pyrgiotakis (2019), and Beltratti and Paladino (2013).

  5. 5.

    John et al. (2013), Chidambaran et al. (2010), Rhodes-Kropf et al. (2005); and Shleifer and Vishny (2003).

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Authors and Affiliations

  1. Department of Finance, Bocconi University, Milan, Italy

    Gimede Gigante

  2. Bocconi University, Milan, Italy

    Mario Baldacchini & Andrea Cerri

Authors
  1. Gimede Gigante
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  2. Mario Baldacchini
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  3. Andrea Cerri
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Correspondence to Gimede Gigante .

Editor information

Editors and Affiliations

  1. Stern School of Business, New York University, New York, NY, USA

    Paul Wachtel

  2. Libera Università Maria SS. Assunta, Rome, Italy

    Giovanni Ferri

  3. Cracow University of Economics, Kraków, Poland

    Ewa Miklaszewska

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Gigante, G., Baldacchini, M., Cerri, A. (2023). Drivers of Shareholder Value Creation in M&A: Event Study of the European Banking Sector in the Post-financial Crisis Era. In: Wachtel, P., Ferri, G., Miklaszewska, E. (eds) Creating Value and Improving Financial Performance. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-24876-4_9

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  • DOI: https://doi.org/10.1007/978-3-031-24876-4_9

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  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-031-24875-7

  • Online ISBN: 978-3-031-24876-4

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

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