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Wealth Effects of International Acquisitions by US Banks
Author(s) -
Gleason Kimberly C.,
Mathur Ike
Publication year - 1998
Publication title -
financial markets, institutions and instruments
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.386
H-Index - 23
eISSN - 1468-0416
pISSN - 0963-8008
DOI - 10.1111/1468-0416.00025
Subject(s) - excess return , profitability index , shareholder , monetary economics , business , economics , financial system , finance , biology , corporate governance , paleontology , context (archaeology)
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.