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Title: The role of Merger & Acquisition in the banking sector
Authors: Tong, Zixuan 
Issue Date: 2020
Source: Tong, Z. (2020). The role of Merger & Acquisition in the banking sector [Unpublished bachelor's thesis]. Wenzhou-Kean University.
Abstract: This thesis focuses on the role of M&A in the banking sector. In common sense, people would expect great benefits from the merger and acquisition operations, believing that great positive outcomes are exactly the reason why the business world is so fanatic about it. However, sometimes the reality is the opposite of people’s expectation. The merged companies and merging companies may suffer from operating inefficiency after the operation. Correspondingly, one of the main objectives of this thesis is to disclose the real outcomes of M&A on the merged banks in terms of their stock prices. Z-tests are employed to compare two potentially related data sets. In this thesis, I focus on comparing the difference in mean return between stock and index (KBE US Equity) during the M&A and the difference in stock return before and after the M&A. Also, the event study method is used to find out if cumulative average abnormal return exists during the event window [-30, +30]. After running a z-test, the conclusion that no significant difference is spotted in the comparison between mean return of the stock and that of the index is shown. Also, it is proved that merger operation has no significant impact on the company’s stock prices. However, in the event study, the existence of some abnormal returns before the announcement periods is verified. Thus, the EMH (Efficient Market Hypothesis) is not valid in this case, meaning that the market was not operating efficiently and some investors took advantage of their inside information and earned abnormal returns before the M&A announcement.
Appears in Collections:Theses and Dissertations

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