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BANK HOLDING COMPANY ACQUISITIONS, STOCKHOLDER RETURNS, AND REGULATORY UNCERTAINTY
Author(s) -
Desai Anand S.,
Stover Roger D.
Publication year - 1985
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.1985.tb00396.x
Subject(s) - shareholder , business , abnormal return , finance , financial system , accounting , monetary economics , economics , corporate governance , stock exchange
This paper examines the returns accruing to the bank holding company (BHC) stockholders when an acquisition is initiated by the BHC. There is a significant, positive abnormal return to these shareholders when the acquisition is announced. The magnitude of this return does not depend on the relative size of the acquired firm. Further, the regulatory environment for these BHC acquisitions introduces uncertainty about the eventual outcome of the review process. Upon approval from the Federal Reserve Board (FRB), the BHC stockholders earn an additional, significantly positive abnormal return.