Abnormal stock market returns to announcements of M&A banking deals in Greece 1996-2013



This study has undertaken a comprehensive empirical analysis of the wealth effects of bank M&As in Greece over the period 1996-2013. The purpose is to measure the performance of merger participants over the acquisition period as a deviation of how shareholders’ actual returns differ from expected returns conditional on the particular process of M&A. The authors develop a conceptual framework that integrates theoretical perspectives from economics, finance, organization theory, strategic management and human resource management to offer a broader process-oriented integrative model of the empirical evidence and theories suggested to explain acquisitions. The empirical analysis reports insignificant abnormal gains for acquiring banks, significant positive abnormal returns at 7,44% for acquired banks, and 2,91% positive abnormal returns for the combined entity, in the event window [-10;+1]. The findings indicate that, on average, the Greek bank mergers neither create nor destroy shareholder wealth. This result is consistent with the findings of other Greek event studies and the bulk of US and European event studies on M&A wealth effects. On average, acquired firm shareholders gain at the expense of the acquiring firm and market value of the combined entity appears to have little improvement around the announcement of the transaction. The conceptual framework explicitly describes that wealth effects of bank M&As in Greece over the period 1996-2013 may be a result of macroeconomic theory and perfectly competitive market, lack of strategic relatedness and synergy realization, managerial hubris, or unethical behavior of managers derived from expense preference approach of agency theory.

Full Text:



Amel, D., Barnes, C., Panetta, F., and Salleo, C. (2004). Consolidation and efficiency in the financial sector: A review of the international evidence. Journal of Banking and Finance, 28(10), 2493-2519.

Achampong, F.K., and Zemedkun, W. (1995). An empirical and ethical analysis of factors motivating managers' merger decisions. Journal of Business Ethics, 14(10), 855-865.

Aktas, N., de Bodt, E., and Roll, R. (2007). Learning, hubris and corporate serial acquisitions. CORE, Working Paper No. 2007/68.

Asimakopoulos, I., and Athanasoglou, P. (2009). Revisiting the merger and acquisition performance of European banks. Bank of Greece, Working Paper No. 100.

Asimakopoulos, I., Athanasoglou, P., and Georgiou, E. (2005). The effects of M&A announcement on Greek bank stock returns. Economic Bulletin of Bank of Greece, 24(1), 27-44.

Ayadi, R. (2007). Assessing the performance of banking M&As in Europe: A new conceptual approach. CEPS, Working Paper No.1537.

Barney, J.B. (1988) Returns to bidding firms in mergers and acquisitions: reconsidering the relatedness hypothesis. Strategic Management Journal, 9(1), 71-78.

Bertoncelj, A., and Kovač, D. (2007). An integrated approach for a higher success rate in mergers and acquisitions. Zbornik Radova, 25(1), 167-187.

Becher, D.A. (2000). The valuation effects of bank mergers. Journal of Corporate Finance, 6(2), 189-214.

Becher, D.A. (2006). Bidder returns and merger anticipation: Evidence from banking deregulations. Journal of Corporate Finance, 15(1), 85-98.

Behr, A., and Heid, F. (2011). The success of bank mergers revisited. An assessment based on a matching strategy. Journal of Empirical Finance, 18(1), 117-135.

Beitel, P., Schiereck, D., and Wahrenburg, M. (2004). Explaining M&A success in European banks. European Financial Management, 10(1), 109-139.

Beitel, P., and Schiereck, D. (2001). Value creation at the ongoing consolidation of the European banking market. Institutions for mergers and acquisitions, Working Paper 05-01.

Bloch, T. (2008). The effects of bank mergers on small business lending in Germany. Goethe University Frankfurt. Working Paper Series: Finance and Accounting WP-103.

Boot, A.W.A., and Thakor, A.V. (2000). Can relationship banking survive competition? The Journal of Finance, 55(2), 679-713.

Brewer, E., Jackson, W., Jagtiani, J., and Nguyen, T. (2000). The price of bank mergers in the 1990s. Economic Perspectives, Federal Reserve Bank of Chicago, 1, 2-23.

Cartwright, S., and Schoenberg. R. (2006). Thirty years of mergers and acquisitions research: recent advances and future opportunities. British Journal of Management, 17(S1), S1-S5.

Campa, J.M., and Hernando, I. (2004). Shareholder value creation in European M&As. European Financial Management, 10(1), 47-81.

Campa, J.M., and Hernando, I. (2006). M&As performance in the European financial industry. Journal of Banking & Finance, 30(2), 3367-3392.

Chen, C.R., Steiner, T.L., and Whyte, A.M. (2006). Does stock option-based executive compensation induce risk-taking? An analysis of the banking industry. Journal of Banking & Finance, 30(3), 915-945.

Christenberg, H.K., and Montgomery, C.A. (1981). Corporate economic performance: diversification strategy versus market structure. Strategic Management Journal, 2(4), 327-344.

Cybo-Ottone, A., and Murgia, M. (2000). Mergers and shareholder wealth in European banking. Journal of Banking & Finance, 24(6), 831-589.

Dagnino, G.B., Mina, A., and Picone, P.M. (2014). La hubris manageriale quale fonte della irresponsabilità d’impresa: uno studio esplorativo. Sinergie Italian Journal of Management, 95(1), 141-160.

Davidson, I., and Ismail, A. (2005). Further analysis of mergers and shareholder wealth effects in European banking. Applied Financial Economics, 15(1), 13-30.

De Guevara, J.F., Maudos, J., and Perez, F. (2005). Market power in European banking sectors. Journal of Financial Services Research, 27(2), 109-137.

DeLong, G. (2001). Stockholder gains from focusing versus diversifying bank mergers. Journal of Financial Economics, 59(2), 221-252.

Demsetz, R.S., and Strahan, P.E. (1997). Diversification, size and risk at bank holding companies. Journal of Money, Credit and Banking, 29(3), 300-313.

DeYoung, R., Evanoff, D.D., and Molyneux, P. (2009). Mergers and acquisitions of financial institutions: A review of the post-2000 literature. Journal of Financial Services Research, 36(2-3), 87-110.

Dodd, W., and Warner, J.B. (1983). On corporate governance: A study of proxy contests. Journal of Financial Economics, 11(4), 401-438.

Doukas, J.A., and Petmezas, D. (2007). Acquisitions, overconfident managers and self-attribution bias. European Financial Management, 13(3), 531-577.

Duso, T., Gugler, K., and Yortoglu, B. (2010). Is the event study methodology useful for merger analysis? A comparison of stock and accounting data. International Review of Law and Economics, 30(2), 186-192.

Dilshad, M. (2012). Profitability analysis of mergers and acquisitions: An event study approach. Macrothink Institute, 3(1), 89-125.

Fama, E.F. (1970). Efficient capital markets: a review of theory and empirical work. Journal of Finance, 25(2), 383-417.

Fama, E., Fisher, L., Jensen, M., and Roll, R. (1969). The adjustment of stock prices to new information. International Economic Review, 10(1), 1-27.

EFB (2012). European banking sector: Facts and figures. Retrieved from http://www.ebf-fbe.eu/uploads/FF2012.pdf.

Focarelli, D., and Pozzolo, A.F. (2001). The patterns of cross-border bank mergers and shareholdings in OECD countries. Journal of Banking & Finance, 25(12), 2305-2337.

Goddard, J., Molyneux, P., and Zhou, T. (2012). Bank mergers and acquisitions in emerging markets: Evidence from Asia and Latin America. The European Journal of Finance, 18(5), 419.438.

Hannan, T., and Pillof, S.J. (2009). Acquisition targets and motives in the banking industry. Journal of Money, Credit and Banking, 41(6), 1167-1187.

Hart, J.R., and Apilado, V.P. (2002). Inexperienced banks and interstate mergers. Journal of Economics and Business, 54(3), 313-330.

Hatzigayos, T., Lyroudi, K., and Subeniotis, D. (2000). The legal innovations and the practical experience of mergers in the Greek banking system. Proceedings of the International Scientific and Practical Conference on Financial Stabilization and Economic Growth, Svishtov, Bulgaria, 26-27 October 2000.

Hendricks, D. (1999). Comment on Hancock, Humphrey, and Wilcox. Journal of Banking & Finance, 23(3), 422-426

Hernando, I., Nieto, M.J., and Wall, L.D. (2009). Determinants of domestic and cross-border bank acquisitions in European Union. Journal of Banking & Finance, 33(6), 1022-1032.

Hirshleifer, J. (2005). Price Theory and Applications: Decisions, Markets, and Information.7th edition. Cambridge, UK: Cambridge University Press.

Houston, J.F., and Ryngaert, M.D. (1994). The overall gains from large bank mergers. Journal of Banking and Finance, 18(6), 1155-1176.

Jensen, M.C., and Ruback, R. (1983). The market for corporate control: the scientific evidence. Journal of Financial Economics,11(1), 5-50.

Intrisano, C., and Rossi, F. (2012). Do M&As generate value for shareholders? An analysis of the Italian banking sector. Chinese Business Review, 11(2), 206-216.

Kane, E.J (2000). Incentives for banking megabank mergers: What motives might regulators infer from event-study evidence. Journal of Money, Credit and Banking, 32(3), 671-701.

King, D.R., Dalton, D.R., Daily, C.M., and Covin, J.G. (2004). Meta-analyses of post-acquisition performance: indications of unidentified moderators. Strategic Management Journal, 25(2), 187-200.

Kwan, S., and Eisenbeis, R.A. (1999). Mergers of publicly traded banking organizations revisited. Economic Review of the Federal Reserve Bank of Altanta, 84(4), 26-37.

Liargovas, P., and Repousis, S. (2011). The impact of mergers and acquisitions on the performance of the Greek banking sector: An event study approach. International Journal of Economics and Finance, 3(2), 89-100.

Lidorikis, A. (2013). Twenty years of bank M&As: From 47 credit institutions to only four systemic ones. Retrieved from http://news.kathimerini.gr/4dcgi/_w_articles_economy_2_20/07/2013_527342.

Lubatkin, M. (1983). Merger and the performance of the acquiring firm. Academy of Management Review, 8(2), 218-225.

Malmendier, U., and Tate, G. (2008). Who makes acquisitions? CEO overconfidence and the market’s reaction. Journal of Financial Economics, 89(1), 20-43.

Manasakis, C. (2009). Shareholder wealth effects from mergers and acquisitions in the Greek banking industry. International Journal of Banking, Accounting and Finance, 1(3), 242-256.

Mandekler, G. (1974) Risk and return: the case of emerging firms. Journal of Financial Economics, 1(4), 303-335.

Napolitano, M.R. (2003). La Gestione Dei Processi di Acquisizione e Fusione di Imprese. Milano, Italy: Franco Angeli.

Mylonidis, N., and Kelnicola, I. (2005). Merging activity in the Greek banking system: A financial accounting perspective. South Eastern Europe Journal of Economics, 1(1), 121-144.

Pasiouras, F., and Zopounidis, C. (2008). Consolidation in the Greek banking industry: Which banks are acquired? Managerial Finance, 34(3), 198-213.

Pillof, S.J. (1996). Performance changes and shareholder wealth creation associated with mergers of publicly traded banking institutions. Journal of Money, Credit and Banking, 28(3), 294-310.

Rezitis, A.N. (2008). Efficiency and productivity effects of bank mergers: Evidence from the Greek banking industry. Economic Modelling, 25(2), 236-254.

Roll, R. (1986). The hubris hypothesis of corporate takeovers. Journal of Business, 59(2), 197-216.

Rumelt, R. (1974). Strategy, Structure, and Economic Performance. Cambridge, MA: Harvard University Press.

Shimizu, K., Hitt, M.A., Vaidyanath, D., and Pisano, V. (2004). Theoretical foundations of cross-border mergers and acquisitions: a review of current research and recommendations for the future. Journal of International Management, 10(3), 307-353.

Staikouras, C.K., and Koutsomanoli-Phillipaki, A. (2006). Competition and concentration in the new European banking landscape. European Financial Management, 12(3), 443-482.

Sundaramurthy, C. (2000). Antitakeover provisions and shareholder value implications: a review and a contingency framework. Journal of Management, 26(5), 1005-1030.

Templeton, W., and Clark, R. (2011). European banking after the euro: Progress and problems. Managerial Finance, 27(9), 21-31.

Tourani Rad, A., and Van Beek, L. (1999). Market valuation of European bank mergers. European Management Journal, 17(5), 532-539.

Vergos, K.P., and Christopoulos, A.G. (2008). The effects of acquisitions on the market value of the banking sector: An empirical analysis from Greece. European Journal of Scientific Research, 24(3), 410-419.

Walter, I. (2009). Economic drivers of structural change in the global financial services industry. Long Range Planning, 42(5-6), 588-615.

Walter, I. (2003). Strategies in financial services, the shareholders, and the system: is bigger and broader better? Hamburgisches Welt-Wirtschafts-Archiv (HWWA), Working Paper No. 205.

Wübben, B. (2007). German Mergers and Acquisitions in the USA: Transaction Management and Success. Frankfurt, Germany: Springer Science & Business Media.


  • There are currently no refbacks.

Copyright (c) 2015 Management Dynamics in the Knowledge Economy

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

© Faculty of Management (SNSPA)

Creative Commons License
This work is licensed under CC BY-NC

The opinions expressed in the papers published are the authors’ own and do not necessarily express the views of the editors of this journal. The authors assume all responsibility for the ideas expressed in the materials published.

ISSN 2392-8042 (online)