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Punished banks' acquisitions: Evidence from the U.S. banking industry

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. pp. 744-764.

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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.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > Surrey Business School
Authors :
Papadimitri, Panagiota
Staikouras, Panagiotis
Travlos, Nickolaos
Tsoumas, Chris
Date : October 2019
DOI : 10.1016/j.jcorpfin.2019.07.014
Uncontrolled Keywords : Bank mergers and acquisitions; Enforcement actions; Inefficient management
Depositing User : Clive Harris
Date Deposited : 18 Oct 2019 11:28
Last Modified : 18 Oct 2019 11:28

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