Abstract
Existing studies on bank takeovers have not been able to distinguish among the three competing motives: synergy, agency, and hubris. This paper distinguishes the three competing motives by examining the relations between target gains and total gains and between acquirer gains and target gains. Empirical results show that bank takeovers are primarily motivated by synergy, although there is also strong evidence of hubris. Our results also suggest that hubris may explain the positive target gains and zero or negative acquirer gains found in this and many other bank takeover studies. Lastly, evidence exists to suggest that agency, along with hubris, may explain takeovers with negative total gains (JEL G21, G34).
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