Do M&As create value for US financial firms post the 2008 crisis?

Abstract

This study is conducted to examine the impact of M&As post 2008 crisis on firm value. Specifically, we highlight the impact of M&As on the acquirer and target of the US financial firms in addition to their combined effect. My research attempts to answer the following questions: Do M&As after the 2008 crisis create positive value for US financial firms? Has the impact changed in comparison with M&As evidence prior to the 2008 crisis? To answer such questions, I employed an event study methodology to examine the average abnormal return (AAR) and average accumulative abnormal return (ACAR). I included two datasets: an event dataset that contains financial firms’ M&As announcements from 2010 to 2014, and the CRSP dataset that contains daily stock return along with market index return (S&P 500). The results show that M&As create positive value for US financial firms, and the results are statistically significant at the 1% level for target firms, acquirer firms and both combined. The results also show that the post-crisis value impact of M&As on US financial firms is higher than the average impact of M&A across all industries prior to the crisis.