Bidder Returns Research Articles

Bank acquisitions and ownership structure: Theory and evidence

In this paper we both theoretically and empirically consider the joint nature of two ownermanager conflict resolution mechanisms: insider shareholdings, α, and shareholder concentration, γ. We find evidence of a significant entrenchment effect for high α, low γ firms. Moreover, bidder returns are found to be positive for high α, high γ firms only. We utilize a switching of regression regimes model to solve for critical values of α and γ that subdivide the universe of acquiring firms into separate and distinct ownership structure regimes, i.e., that define ‘high’ vs. ‘low’ levels of α or γ.

Returns to Acquirers and Competition in the Acquisition Market: The Case of Banking

In this paper we examine the effect of competition in the market for bank acquisitions on the acquirers' stock returns. Bank acquisitions are examined because federal and state regulations greatly facilitate the identification of potential bidders and alternative targets in an acquisition. We find that the gain to acquirers is positively related to the number of alternative target firms available and negatively related to the number of other potential bidders. These results provide some insights into the sources of gains from bank acquisitions.