This study examines the influences of mergers and acquisitions (M&As) on companies' profitability and compares these influences with economic conditions to discuss their significance. It hypothesizes that market power, total assets and synergistic effects are all positively related to profitability, but they are less significant than the economic influences such as economic growth, consumer confidence and producer confidence. Focusing on the largest U.S. mergers and acquisitions during the period from 1998 to 2003, two economic models are designed to test these hypotheses. The first model examines the relationship between M&A influences and profitability. The test results of this model suggest that market power and total assets are both significant to profitability and that synergistic effects are insignificant. The study also finds that increasing market power is 50 times more efficient than increasing total assets in generating profit. The second model examines the relationship between the economic influences and profitability, but the tests results are inconclusive and suggest that economic factors and profitability have non-linear correlations
The recent deregulation in the financial industry in both the EU and U.S. has sparked a wave of mergers within each region and country. Furthermore, the increase in globalization and international integration has been encouraging banks to expand across borders. This study provides an analysis of EU, U.S., and Inter U.S. - EU bank mergers during the period 2002 - 2005. The hypothesis is that recent inter U.S. - EU bank mergers provide positive shareholder wealth creation around the announcement date and increase efficiency (measured via return on assets) post-merger.