Mergers and Long-Term Corporate Performance: Evidence from Cross-Border Bank Acquisitions

12 Pages Posted: 22 Dec 2010 Last revised: 18 Mar 2011

See all articles by Donald R. Fraser

Donald R. Fraser

Texas A&M University - Department of Finance

Hao Zhang

University of Macau - Faculty of Business Administration

Date Written: October 1, 2009

Abstract

We provide evidence on operating performance changes at a sample of U.S. banks acquired by non-U.S. banking organizations over the 1980-2001 period. Our sample allows us to compare directly the pre-acquisition performance of the targets with their post acquisition performance, a comparison that has not been possible in prior studies. We find that these cross border acquisitions produce improved target performance. Cash flow profitability at the target increases, labor utilization improves, and loan losses do not rise. We also find evidence that the improvement in target operating performance primarily takes place for those acquisitions that occur following passage of the Reigle-Neal interstate branching legislation.

Keywords: cross-border banking, mergers and acquisitions

JEL Classification: F23, G21

Suggested Citation

Fraser, Donald R. and Zhang, Hao, Mergers and Long-Term Corporate Performance: Evidence from Cross-Border Bank Acquisitions (October 1, 2009). Journal of Money, Credit, and Banking, Vol. 41, No. 7, 2009, Available at SSRN: https://ssrn.com/abstract=1729065

Donald R. Fraser

Texas A&M University - Department of Finance ( email )

430 Wehner
College Station, TX 77843-4218
United States
979-845- 2020 (Phone)

Hao Zhang (Contact Author)

University of Macau - Faculty of Business Administration ( email )

Macau

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