Punished banks' acquisitions: evidence from the U.S. banking industry
Research output: Contribution to journal › Article › peer-review
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.
| Original language | English |
|---|---|
| Pages (from-to) | 744-764 |
| Journal | Journal of Corporate Finance |
| Volume | 58 |
| Early online date | 29 Jul 2019 |
| DOIs | |
| Publication status | Published - Oct 2019 |
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