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The market response to bidders of bank mergers : comparing recessionary and expansionary periods

by Outtrim, Eliza

Abstract

This thesis compares the market response to bidding banks of a merger in an expansionary period and a recessionary period upon the announcement of that merger. Bidding banks tend to see negative gains upon announcement of a merger. With the recent financial crisis, this thesis hypothesizes that in a recessionary period bidding banks will experience more negative gains than in an expansionary period due to the market's risk aversion during an economic recession and the lack of shareholder wealth maximization by management. Twenty-three bidding banks are examined to gauge the market's response to the bidding banks upon the announcement of a merger. To conduct this study, two methodologies are applied: Tobin's q and the Capital Asset Pricing Model. The results do not uphold the hypothesis showing no enhanced losses to bidding banks in the recession period. This thesis attempts to see if a recessionary period affects the way the market responds to bank mergers.

Note

bachelor

Bachelor of Arts

Includes bibliographical references.

Administrative Notes

None

Copyright
Copyright restrictions apply.
Publisher
Colorado College
PID
coccc:4102
Digital Origin
born digital
Extent
68 pages : illustrations
Thesis
Senior Thesis -- Colorado College
Thesis Advisor
Laux, Judy
Department/Program
Department of Economics and Business
Degree Name
bachelor
Degree Type
Bachelor of Arts
Degree Grantor
Colorado College
Date Issued
2011