Mergers and Acquisitions in the Banking Industry Research Paper by write123

Mergers and Acquisitions in the Banking Industry
This paper discusses value creation through mergers and acquisitions in the banking industry.
# 105418 | 5,800 words | 9 sources | MLA | 2008 | US


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Description:

This research examines mergers and acquisitions in the United States banking industry involving the formation of mega banks. It uses event study methodology and accounting performance techniques to determine the valuation effects of structural changes that are the result of the merger. When a merger is announced, it often causes abnormal stock price jumps for both the acquirer and target company at or around the date of the announcement. Acquisitions that concentrate on increasing the diversity of the business earned the highest abnormal returns. The writer notes, however, that other types of mergers neither create nor destroy shareholder value. Stock return alone does not paint the entire picture of the value created by the merger. This research study assesses the mergers using accounting performance techniques as well as stock price analysis to understand the likelihood that the value creation is stable, and not simply reactionary on the part of the shareholders.

Outline:
Abstract
Introduction
Background of the Study
Rationale
Hypothesis and Research Questions
Importance of This Study
Case Synopsis of the Mergers to be used in this Study
JP Morgan Merger/Chase
JP Morgan Chase and Bank One
Bank of America/Fleet Boston
Methodology
Conclusion

From the Paper:

"Some mergers and acquisitions are strategic and nature. Perhaps the acquiring company may need the production capabilities of the other company. There are some mergers and acquisitions that take place so that supplier relationships can be established. Sometimes a merger or acquisition may take place so that a company can gain access to a new niche market. This was found to be one of the primary reasons for mergers and acquisitions in the banking industry."
"Large scale mergers eliminate competition and secure a greater market share. In some cases, an acquisition may take place so that one company can acquire its competition. Regardless of the primary reason for the merger or acquisition, one can be certain that at least one company will benefit from it. In many cases, there will be a mutual benefit and the combined company will be more profitable Some companies were created to be sold, providing quick cash revenue for their owners, as opposed to the long-term gains that are the typical reason for starting a business."

Sample of Sources Used:

  • Archibus, Inc, (2005). JP Morgan Chase: Managing the Merger. Retrieved from http://www.archibus.com/success/jpmorganchase.htm.
  • Bild, M., Guest, P., Cosh, A., and Runsten, L. (2002). DO TAKEOVERS CREATE Value? A RESIDUAL INCOME APPROACH ON U.K. DATA. ESRC Centre for Business Research, University of Cambridge. Working Paper No. 252. Retrieved from http://www.cbr.cam.ac.uk/pdf/WP252.pdf
  • Campa, J. & Hernando, I. (2004). Shareholder Value Creation in European M & As. International Macroeconomics, G34, G38. Retrieved from http://www.cepr.org/pubs/dps/DP4400.asp.
  • CNN. (2004). J.P. Morgan agrees to buy Bank One in a deal that would combine two of the Nation's biggest banks. 15 January 2004. Retrieved from http://money.cnn.com/2004/01/14/news/deals/jpmorgan_bankone/.
  • Cole, C. (2005). Merger of Bank One Corporation into J.P. Morgan Chase & Co. Testimony of the 108th Congress. Retrieved from http://www.icba.org/advocacy/testimonydetail.cfm?ItemNumber=533&sn.ItemNumber= 1699

Cite this Research Paper:

APA Format

Mergers and Acquisitions in the Banking Industry (2008, July 07) Retrieved February 05, 2023, from https://www.academon.com/research-paper/mergers-and-acquisitions-in-the-banking-industry-105418/

MLA Format

"Mergers and Acquisitions in the Banking Industry" 07 July 2008. Web. 05 February. 2023. <https://www.academon.com/research-paper/mergers-and-acquisitions-in-the-banking-industry-105418/>

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