Shareholder wealth effects from mergers and acquisitions in the Greek banking industry

This paper studies the stock market valuation of mergers and acquisitions in the Greek banking sector, from 1995 to 2002, using the standard event study methodology. The results suggest that the targets' shareholders earned significant abnormal returns upon the announcement of both horizontal and diversifying deals. On the other hand, the bidders' shareholders had significant losses in cases of horizontal and zero effects in diversifying deals. Although mergers and acquisitions in the Greek banking sector were not value-enhancing, they can be rationalised under the prism of its recent deregulation. Mergers and acquisitions helped the bidders to increase their market share along with asset value and abstain from being acquired in the short-run. For the targets, mergers and acquisitions were perceived as vehicles to ensure their survival in the European market.