Volume 9, Numbers 1 & 2 / March/June , Pages 1-130
Market Response to Announcements of Mergers of Canadian Financial Institutions
Multinational Finance Journal, 2005, vol. 9, no. 1/2, pp. 72-98
Sebouh Aintablian , Lebanese American University, Lebanon    Corresponding Author
Gordon S. Roberts , York University, Canada

This study examines a sample of mergers of Canadian Financial Institutions during the 1990’s to determine whether in-pillar, cross-pillar and foreign mergers are value-enhancing, and to determine possible sources of synergies behind those mergers. It develops testable hypotheses for Canadian FI mergers by synthesizing prior U.S. tests in the context of Canadian institutional arrangements. The overall results support the generality of findings of prior U.S. studies that the average abnormal return for both the acquiring and target firms is positive and statistically significant. This result suggests that acquisitions in the financial industry are, in Canada as elsewhere, driven by value-maximizing motivations. The study also shows that acquiring institutions’ shareholders benefit more when the acquisition is of a similar type (in-pillar) and domestic.

Keywords : Bank merger announcements; Canada
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