Abstract
Purpose – The purpose of this paper is to analyze the short‐ and long‐term wealth effects of domestic and cross‐border acquisition announcements of banks in Latin American.Design/methodology/approach – This study uses the event study methodology to investigate the short‐term wealth effects of 94 bidding and 24 target banks between 1995 and 2011. Additionally, a buy‐and‐hold abnormal return analysis of 91 acquiring institutions is conducted to study the long‐term wealth effects and a cross‐sectional regression analysis identifies some key drivers of successful M&As.Findings – This paper provides evidence of significant positive stock market reactions for bidders and targets. These results may indicate that in contrast to prior empirical findings in less dynamic banking markets, Latin America is still a region of attractive consolidation conditions.Research limitations/implications – Since data was not available for all Latin America countries, the results may lack generalizability. Therefore, researchers a...
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