Does It Pay to Acquire Private Firms? Evidence From the U.S. Banking Industry

The European Journal of Finance, volume 27, issue 10, 2021[10.1080/1351847X.2020.1799835]

45 Pages Posted: 30 Nov 2017 Last revised: 14 Jul 2021

See all articles by George N. Leledakis

George N. Leledakis

Athens University of Economics and Business, School of Business, Department of Accounting and Finance

E. C. Mamatzakis

Birkbeck College, University of London

Emmanouil G. Pyrgiotakis

University of Essex - Essex Business School

Nickolaos G. Travlos

ALBA Graduate Business School; University of Surrey

Date Written: November 28, 2017

Abstract

We extend the U.S. bank M&As literature by examining bidder announcement abnormal returns in deals involving both public and private targets over a 32-years examination period. Our main findings document the existence of a listing effect in our sample. Banks gain when they acquire private firms and lose when they acquire public firms. Gains in private offers are even higher when bidders employ financial advisors, whereas the opposite is true for public deals. We argue that this adverse advisor effect relates to the different levels of information asymmetry between public and private targets. Our results remain robust when we control for usual determinants of bidder abnormal returns, such as the method of payment, size, or relative size and when we control for sample selection and endogeneity problems.

Keywords: Mergers and Acquisitions, Banks, Listing Effect, Financial Advisor

JEL Classification: G14, G21, G34

Suggested Citation

Leledakis, George N. and Mamatzakis, E. C. and Pyrgiotakis, Emmanouil G. and Travlos, Nickolaos G. and Travlos, Nickolaos G., Does It Pay to Acquire Private Firms? Evidence From the U.S. Banking Industry (November 28, 2017). The European Journal of Finance, volume 27, issue 10, 2021[10.1080/1351847X.2020.1799835], Available at SSRN: https://ssrn.com/abstract=3078497 or http://dx.doi.org/10.1080/1351847X.2020.1799835

George N. Leledakis (Contact Author)

Athens University of Economics and Business, School of Business, Department of Accounting and Finance ( email )

76 Patission Str.
Athens, 104 34
Greece
+30 210 8203 459 (Phone)
+30 210 8228 816 (Fax)

HOME PAGE: http://www.aueb.gr/en/faculty_page/leledakis-georgios

E. C. Mamatzakis

Birkbeck College, University of London

Malet St,
Bloomsbury,
London, WC1E7HX
United Kingdom

Emmanouil G. Pyrgiotakis

University of Essex - Essex Business School ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Nickolaos G. Travlos

University of Surrey ( email )

Guildford
Guildford, Surrey GU2 5XH
United Kingdom

ALBA Graduate Business School ( email )

Athinas Ave. & 2A Areos Str.
Vouliagmeni 166 71, Athens
Greece

HOME PAGE: http://www.alba.edu.gr

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