A Multiple-metric Study of the Returns to Shareholders: the Case of Bank Holding Company Mergers-part Ii, the Source of the Returns

The initial thrust of this research (Thompson 1995) was an event study that dealt with shareholder reaction to the announcement of a merger of two bank holding companies (BHC). It was found that positive abnormal returns accrue to the shareholders of the acquired firm. The abnormal returns to the shareholders of the acquiring firm are either negative or zero and are stock exchange dependent. This paper details regressions analyses that were employed to attempt to isolate the underlying reasons for the abnormal returns. The results of the regressions indicate that, of the variables chosen, only the capital-toassets ratio was significant for the acquired sample. None of the variables were significant for the acquiring sample.