Using Textual Analysis to Identify Merger Participants: Evidence from the U.S. Banking Industry

15 Pages Posted: 3 Nov 2019 Last revised: 21 Sep 2021

See all articles by Apostolos G. Katsafados

Apostolos G. Katsafados

Athens University of Economics and Business - Department of Accounting and Finance; Bank of Greece

Ion Androutsopoulos

Athens University of Economics and Business

Ilias Chalkidis

University of Copenhagen

Emmanouel Fergadiotis

Athens University of Economics and Business

George N. Leledakis

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

Emmanouil G. Pyrgiotakis

University of Essex - Essex Business School

Date Written: October 23, 2019

Abstract

In this paper, we use the sentiment of annual reports to gauge the likelihood of a bank to participate in a merger transaction. We conduct our analysis on a sample of annual reports of listed U.S. banks over the period 1997 to 2015, using the Loughran and McDonald’s lists of positive and negative words for our textual analysis. We find that a higher frequency of positive (negative) words in a bank’s annual report relates to a higher probability of becoming a bidder (target). Our results remain robust to the inclusion of bank-specific control variables in our logistic regressions.

Keywords: Textual analysis, text sentiment, bank mergers and acquisitions, acquisition likelihood

JEL Classification: G14, G21, G34, G40

Suggested Citation

Katsafados, Apostolos G. and Androutsopoulos, Ion and Chalkidis, Ilias and Fergadiotis, Emmanouel and Leledakis, George N. and Pyrgiotakis, Emmanouil G., Using Textual Analysis to Identify Merger Participants: Evidence from the U.S. Banking Industry (October 23, 2019). Finance Research Letters, Vol. 42, pp. 1-6, October 2021, Available at SSRN: https://ssrn.com/abstract=3474583 or http://dx.doi.org/10.2139/ssrn.3474583

Apostolos G. Katsafados

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

76 Patission Street
GR-104 34 Athens
Greece

Bank of Greece ( email )

21 E. Venizelos Avenue
GR 102 50 Athens
Greece

Ion Androutsopoulos

Athens University of Economics and Business ( email )

76 Patission Street
Athens, 104 34
Greece

Ilias Chalkidis

University of Copenhagen ( email )

Universitetsparken 1
Copenhagen, København DK-2100
Denmark

Emmanouel Fergadiotis

Athens University of Economics and Business ( email )

76 Patission Street
Athens, 104 34
Greece

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

Emmanouil G. Pyrgiotakis

University of Essex - Essex Business School ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

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