The recent surge in European cross-border bank mergers and the limited amount of studies investigating the value-consequences of these transactions call for further research. This book assesses the methodologies that are in use to measure M&A success in order to support a rigorous use of these approaches in future analyses. Moreover, the assessment of the bank merger between Italy’s UniCredit and Germany’s Hypovereinsbank exemplifies the accurate application of these tools as well as the usefulness of appraising individual deals within a multi-methodology framework.
Table of Contents
1 Introduction
2 Assessment of methodologies
2.1 Overview of methods to measure M&A-success
2.2 Event study methodology
2.2.1 Basic concepts
2.2.2 Critical issues
2.2.3 Long-horizon event study methodology
2.3 Operating performance analysis
2.3.1 Basic concepts
2.3.2 Critical issues
2.4 Frontier efficiency methodology
2.4.1 Basic concepts
2.4.2 Critical issues
2.5 Case study research
2.5.1 Basic concepts
2.5.2 Critical issues
2.6 A claim for a multi-methodology approach
3 M&A-success in European banking – the case UniCredit-HVB
3.1 Introductory remarks
3.1.1 The selection of the merger case
3.1.2 Presentation of transaction partners
3.1.3 Transaction overview
3.2 Qualitative analysis
3.2.1 Evaluation framework – determinants of M&A-success
3.2.2 Ex ante determinants
3.2.2.1 How to evaluate M&A-strategy?
3.2.2.2 Market-based-view
3.2.2.3 Resource-based view
3.2.3 Ex interim determinants
3.2.4 Ex post determinants
3.3 Quantitative analysis
3.3.1 Short-horizon event study
3.3.2 Long-horizon event study
3.3.2 Operating performance analysis
4 Conclusion
Research Objectives and Topics
This thesis examines the methodologies utilized to evaluate the success of cross-border banking mergers, specifically addressing the value consequences for shareholders. The primary research objective is to assess the reliability and limitations of diverse analytical frameworks—ranging from event studies to qualitative case studies—and to demonstrate their practical application by evaluating the merger between Italy's UniCredit and Germany's Hypovereinsbank.
- Methodological assessment of M&A performance measurement tools.
- Comparative analysis of short-horizon versus long-horizon event study approaches.
- Evaluation of operating performance and frontier efficiency metrics in the banking sector.
- Qualitative exploration of strategic determinants in cross-border bank acquisitions.
- Application of a multi-methodology framework to the UniCredit-HVB merger case.
Excerpt from the Book
2.2 Event study methodology
The fundamental objective of the event study methodology is to determine whether there are any abnormal stock returns following a specific event such as a merger. In fact, this methodology has evolved into the standard method to evaluate security price responses following corporate events in nowadays research.
Although there is no exclusive pattern of how to conduct an event study, there is a general track to follow. The first job is to define the event of interest which is in our case the announcement of an M&A-transaction. In addition, the event window needs to be defined, that is, the time-frame surrounding the event in which we expect the induced abnormal returns to be realized. At this stage studies depart into short- and long-horizon studies with long-horizons generally embracing event windows of one year or more. But since the choice of the event window range is a particular sensitive issue within this methodology, it requires for now to stay with the short-horizon notion, i.e. event windows of less than one year, typically containing just a couple of days around the event under investigation.
Summary of Chapters
1 Introduction: Provides an overview of the global banking merger surge and outlines the research objective to assess performance measurement methodologies through the lens of the UniCredit-HVB case.
2 Assessment of methodologies: Discusses various dynamic approaches to measure M&A success, including event studies, operating performance analysis, frontier efficiency, and case studies, highlighting their respective merits and pitfalls.
3 M&A-success in European banking – the case UniCredit-HVB: Applies a multi-methodology approach to evaluate the UniCredit-HVB merger through qualitative strategy analysis and quantitative stock performance and accounting data assessments.
4 Conclusion: Summarizes the main findings, emphasizing that no single method is superior and advocating for a multi-methodology framework to capture deal-specific idiosyncrasies.
Keywords
Mergers and Acquisitions, M&A Success, Cross-border Banking, Event Study, Operating Performance, Frontier Efficiency, Shareholder Value, UniCredit, Hypovereinsbank, Multi-methodology Approach, Market-based View, Resource-based View, Abnormal Returns, Financial Integration, Banking Consolidation.
Frequently Asked Questions
What is the core focus of this thesis?
The work focuses on assessing the various methodologies used to measure the success and value consequences of cross-border mergers and acquisitions in the global banking industry.
Which central thematic fields are explored?
The paper explores the intersection of financial performance, stock market reactions, and corporate strategy in banking consolidation, specifically analyzing methodologies like event studies and performance ratios.
What is the primary research goal?
The goal is to determine the most accurate and rigorous ways to evaluate merger success and to illustrate this by applying these methods to the UniCredit-HVB merger case.
What scientific methods does the author utilize?
The author employs a multi-methodology framework, combining qualitative case study research with quantitative techniques such as short- and long-horizon event studies and operating performance analysis.
What does the main body of the work cover?
The main part covers a detailed assessment of different M&A evaluation methodologies followed by an in-depth empirical and qualitative analysis of the UniCredit-HVB acquisition.
Which keywords best characterize this work?
The work is best characterized by terms like M&A success, European banking, event studies, shareholder value, and multi-methodology approach.
Why is the UniCredit-HVB merger considered a specific case for this study?
It is selected because it was Europe's largest cross-border bank merger at the time, involving two publicly listed companies, which provides extensive data for both event studies and operating performance analysis.
How does the author handle potential biases in methodology?
The author extensively documents potential biases, such as information leakage, confounding effects, and accounting-choice biases, and advocates for a multi-methodology "triangulation" approach to cross-verify results.
- Quote paper
- Christian Alexander Wegener (Author), 2007, Measuring M&A-Success in Cross-border Banking M&A, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/165733
