Corporate Governance and Post-Merger Perfomance: Evidence from US Banks

• Autorzy: Amira Neffati , Wided Khiari , Azhaar Lajmi
• Języki publikacji: EN

Abstrakty

EN

Mergers operations has currently become one of the key strategies for many firms. It becomes a tool to increase firm value when firm has reached its peak performance. This critical decision expects business performance to improve. The main purpose of this study is to analyze the impact of various governance variables, like managerial ownership, the percentage of shares held by outside directors, the board size, the audit committee size and the percentage of stock options granted to managers, on post merger banks performance and to investigate how the firm size can influence bank performance following mergers operations. It also tends to test the existence of the phenomenon of Empire building which is defined as a primary motivation for mergers operations. Empirical analysis is based on a panel data model applied to a sample of 54 banks come from the list of U.S. bank mergers over a period of 6 years from 2009 to 2015. Our results show that the increase in managerial ownership decreases the value of the deficit, therefore, improves the bank performance following mergers operations. The introduction of firm size shows that this variable is positively correlated with the value of the deficit that is used as a performance measure in this study. Our results converge with previous studies that show an improvement in the performance following bank mergers. (original abstract)

Słowa kluczowe

PL

Banki; Ład korporacyjny; Fuzje i przejęcia; Polityka rządu; Operacje bankowe; Badania empiryczne

EN

Banks; Corporate governance; Mergers and acquisitions; Government policy; Banking transactions; Empirical researches

• Czasopismo: Copernican Journal of Finance & Accounting
• Rocznik: 2020
• Tom: 9
• Numer: nr 3
• Strony: 99-113

Twórcy

autor

Amira Neffati

• University of Tunis, Tunisia

autor

Wided Khiari

• University of Tunis, Tunisia

autor

Azhaar Lajmi

• University of Tunis, Tunisia

Bibliografia

• Adams, R.M. (2012). Consolidation and Merger Activity in the United States Banking Industry from 2000 through 2010. Washington DC : The Federal Reserve Board.
• Al-Sharkas, A.A, Hassan, M.K., & Lawrence, S. (2008). The impact of mergers and acquisitions on the efficiency of the US banking industry: further evidence. Journal of Business Finance and Accounting, 35(1-2), 50-70. http://dx.doi.org/10.1111/j.1468-5957.2007.02059.x.
• Attari, M., & Banerjee, S. (2000). Strategic underinvestment: managerial entrenchment and the ownership structure of firm. Working Paper SSRN. http://dx.doi.org/10.2139/ssrn.135718.
• Benston, G. J. (1985).The Validity of Profits-Structure Studies with Particular Reference to the FTC's Line of Business Data. American Economic Review, 75(1), 37-67.
• Brickley, J.A., Coles, J.L., & Terry, R.L. (1994). Outside directors and the adoption of poison pills. Journal of Financial Economics, 35(3), 371-390. http://dx.doi.org/10.1016/0304-405X(94)90038-8.
• Carcello, J.V., & Neal, T.L. (2000). Audit committee characteristics and auditor reporting. Working Paper SSRN. http://dx.doi.org/10.2139/ssrn.53917.
• Dutescu, A., Ponorica, A.G., & Stanila, G.O. (2013). Effects of mergers and acquisitions on financial performance of the target company. Challenges of the Knowledge Society. Finance and Accounting.
• Hagendorff, J., & Keasey, K. (2009). Post-merger strategy and performance: Evidence from the US and European banking industries. Accounting and Finance, 49(4), 725- 751. http://dx.doi.org/10.1111/j.1467-629X.2009.00306.x.
• Hanson, R.C., & Song, M.H. (1997). Managerial ownership, Board Structure and the Division of Gains in Divestitures. Working Paper SSRN.
• Hermalin, B., & Weisbach, M.S. (1988). The determinants of board composition. RAND Journal of Economics, 19(4), 589-606.
• Hughes J.P., Lang, W., Mester, L.J., Moon, C.G., & Pagano, M.S. (2002). Do bankers sacrifice value to Build Empire? Managerial incentives, Industry Consolidation, and Financial Performance. FRB of Philadelphia Working Paper, 02-2. http://dx.doi.org/10.2139/ ssrn.314574.
• Jensen, M.C. (1986). Agency cost of free cash flow, corporate finance, and takeovers. American Economic Review, 76(2), 323-329. http://dx.doi.org/10.2139/ssrn.99580.
• Jensen, M.C., & Meckling, W.H. (1976). Theory of the firm, managerial behaviour, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360. http://dx.doi.org/10.1016/0304-405X(76)90026-X.
• Jensen, M.C., & Murphy, K.J. (1990). Performance pay and top management incentives. Journal of Political Economy, 98(2), 225-264. http://dx.doi.org/10.1086/261677.
• Jondrow, J., Lovell, C.A., Materov, I.S., & Shmidt, P. (1982). On the estimation of technical efficiency in the stochastic frontier production function model. Journal of Econometrics, 19(2-3), 233-238. http://dx.doi.org/10.1016/0304-4076(82)90004-5.
• Kartal, M.T., Ibis, C., & Catikkas, Ö. (2018). Adequacy of audit committees : A study of deposit banks in Turkey'. Borsa Istanbul Review, 18(2), 150-165. http://dx.doi.org/10.1016/j.bir.2018.01.002.
• Morck, R., Shleifer, A., & Vishney, R.W. (1988). Management ownership and market valuation: An empirical analysis. Journal of Financial Economics, 20, 293-315. http:// dx.doi.org/10.1016/0304-405X(88)90048-7.
• Peasnell, K.W., Pope, P.F., & Young, S. (1998). Managerial ownership and the demand for outside directors. Working Paper Lancaster University.
• Pilloff, S.J. (2004). Bank Merger Activity in the United States, 1994-2003, Staff Study 176. Washington: Board of Governors of the Federal Reserve System.
• Shleifer, A., & Vishney, R.W. (1997). A survey of corporate governance. Journal of Finance, 52(2), 737-783. http://dx.doi.org/10.1111/j.1540-6261.1997.tb04820.x.
• Wheelock, D.C. (2011). Banking Industry Consolidation and Market Structure: Impact of the Financial Crisis and Recession. Federal Reserve Bank of St. Louis Review, 93, 419-438.
• Zhou, H., Ansah, O.S., & Maggina, A. (2018). Board of directors, audit committee, and firm performance: Evidence from Greece. Journal of International Accounting, Auditing and Taxation, 31, 20-36. http://dx.doi.org/10.1016/j.intaccaudtax.2018.03.002.

Identyfikatory

DOI

10.12775/CJFA.2020.014