Punished banks' acquisitions: evidence from the U.S. banking industry
Punished banks' acquisitions: evidence from the U.S. banking industry
We study whether formal enforcement actions, imposed on U.S. banks during 2000–2014 for serious financial safety and internal control problems, affect the probability that punished banks become targets of mergers and acquisitions (M&As). We find an increase in the probability of punished banks' acquisitions of at least 0.7%. A similar pattern is identified during both the financial crisis period of 2008–2009 and beyond the 2008–2009 period. Furthermore, these acquisitions improve the operating performance of post-acquisition combined entity, lending support to the hypothesis that punished banks' M&As serve as a means to replace inefficient management and restore the target banks' performance.
744-764
Papadimitri, Panagiota
b7edf14e-3b00-4317-a6ce-8741b593d5b0
Staikouras, Panagiotis
e80eccea-3d70-4458-9fb2-4870bb3fbfc6
Travlos, Nickolaos G.
20810048-08d6-4235-950d-1354fcfa16d0
Tsoumas, Chris
40967dd3-4d89-4093-880c-b5160adabe08
October 2019
Papadimitri, Panagiota
b7edf14e-3b00-4317-a6ce-8741b593d5b0
Staikouras, Panagiotis
e80eccea-3d70-4458-9fb2-4870bb3fbfc6
Travlos, Nickolaos G.
20810048-08d6-4235-950d-1354fcfa16d0
Tsoumas, Chris
40967dd3-4d89-4093-880c-b5160adabe08
Papadimitri, Panagiota, Staikouras, Panagiotis, Travlos, Nickolaos G. and Tsoumas, Chris
(2019)
Punished banks' acquisitions: evidence from the U.S. banking industry.
Journal of Corporate Finance, 58, .
(doi:10.1016/j.jcorpfin.2019.07.014).
Abstract
We study whether formal enforcement actions, imposed on U.S. banks during 2000–2014 for serious financial safety and internal control problems, affect the probability that punished banks become targets of mergers and acquisitions (M&As). We find an increase in the probability of punished banks' acquisitions of at least 0.7%. A similar pattern is identified during both the financial crisis period of 2008–2009 and beyond the 2008–2009 period. Furthermore, these acquisitions improve the operating performance of post-acquisition combined entity, lending support to the hypothesis that punished banks' M&As serve as a means to replace inefficient management and restore the target banks' performance.
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Accepted/In Press date: 26 July 2019
Published date: October 2019
Identifiers
Local EPrints ID: 469690
URI: http://eprints.soton.ac.uk/id/eprint/469690
ISSN: 0929-1199
PURE UUID: e91aa57b-0dbd-4341-bb6e-d145755831dc
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Date deposited: 22 Sep 2022 16:37
Last modified: 17 Mar 2024 04:13
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Author:
Panagiota Papadimitri
Author:
Panagiotis Staikouras
Author:
Nickolaos G. Travlos
Author:
Chris Tsoumas
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