Geographical and Operational Focus/Diversification Reexamined. Acquisition Frequency, Deregulation, and Announcement Returns from Bank M&AS

Abstract

We examine bank merger and acquisition announcement returns during a time of industry deregulation and find little evidence supporting either a diversifying or focusing argument from a geographical or operational viewpoint. Overall, deals generate negative acquirer returns. Our study suggests that regulatory environment and acquirer acquisition appetite impact returns. Infrequent acquirers experience lower returns during the deregulatory period compared to deals announced outside the deregulatory period, and to more frequent acquirers. Might these results suggest more frequent acquirers had developed superior knowledge and expertise which they were able to exploit in the new environment, implying that repetition helps facilitate success?