M&A announcements in the Nordic banking sector : An event study analysis of bidder and target returns

Abstract

This study examines the impact of M&A announcements in the Nordic banking sector from 2000-2024, a period of significant regulatory changes. Using the even study methodology, we assess abnormal returns for 83 acquiring and 20 target banks.

Our findings reveal that target banks consistently experience significantly positive abnormal returns, particularly in the three-day window around the date of announcement, aligning with prior research. Historically, studies have found mixed and insignificant returns for acquiring banks. We find that in the Nordics bidder returns are consistently positive across all windows, though with varying significance.

When examining specific timeframes, notable differences emerge. From 2000-2010 our results for bidders are mixed and insignificant, consistent with earlier empirical evidence. Post-2010, following the implementation of Basel III, we observe positive abnormal returns across all windows, suggesting a shift in market participant perception of M&As in the Nordic banking sector.

Additionally, our findings indicate that the cross-border transactions have a negative impact, while relative deal size and stock as the form of payment is associated with higher abnormal returns. However, their significance is highly dependent on the window length.

This study examines the impact of M&A announcements in the Nordic banking sector from 2000-2024, a period of significant regulatory changes. Using the even study methodology, we assess abnormal returns for 83 acquiring and 20 target banks.

Our findings reveal that target banks consistently experience significantly positive abnormal returns, particularly in the three-day window around the date of announcement, aligning with prior research. Historically, studies have found mixed and insignificant returns for acquiring banks. We find that in the Nordics bidder returns are consistently positive across all windows, though with varying significance.

When examining specific timeframes, notable differences emerge. From 2000-2010 our results for bidders are mixed and insignificant, consistent with earlier empirical evidence. Post-2010, following the implementation of Basel III, we observe positive abnormal returns across all windows, suggesting a shift in market participant perception of M&As in the Nordic banking sector.

Additionally, our findings indicate that the cross-border transactions have a negative impact, while relative deal size and stock as the form of payment is associated with higher abnormal returns. However, their significance is highly dependent on the window length.