Bank-Insurance Mergers and Acquisitions (M&A) and Shareholders’ Value


This thesis investigates whether M&A between banks and insurance companies create or destroy shareholders' value using a global dataset spanning 1999 to 2019. The study makes three significant contributions to the literature. In Chapter 4, we find that the various forms of restructuring across the banking and insurance sectors have a differential impact on shareholders’ value. For instance, we find that focused acquisitions are wealth destroying whilst diversified acquisitions (bancassurance) enhance wealth but only for the owners of insurance companies. In contrast, except for instances when banks bid for insurance targets, we find evidence that other bank–insurance M&A generate wealth for the targets’ shareholders. Chapter 5 utilises the cross-sectional OLS to test the explanatory power of deal characteristics and firm-level variables to the announcement returns of acquirers and targets. The results show that abnormal returns cannot be explained by a single determinant but rather by several factors such as firm and deal characteristics, as well as the prevailing economic conditions in the target country. We find that leverage ratio as a proxy for free-cash flow and acquisition of publicly listed targets are negatively associated with acquirer returns while Tobin’s Q is positively associated with bidders' excess returns. Chapter 6 uses both logit and survival analysis to assess how internal governance structures influence the likelihood that bank–insurance M&A will be completed, as well as the time a deal takes to close after its initial announcement. The results suggest that internal governance can, to some extent, influence deal completion likelihood and the time-lapse between deal announcement and completion. Specifically, we find that the probability of a bank–insurance deal being completed quicker is higher if corporate boards are more independent, and lower if corporate boards are staggered. The study also finds that a large board size increases only the probability of completing a deal whereas CEO/Chair duality shortens the completion time. These findings contribute to the understanding of factors that would help managers to avoid deal abandonments and protraction in deal-making, as doing this would save firms from unnecessary frustration, financial and reputational loss.

Divisions: College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship
College of Business and Social Sciences > Aston Business School
Aston University (General)
Additional Information: Copyright © Richard Mochoge Ondimu, 2022. Richard Mochoge Ondimu asserts his moral right to be identified as the author of this thesis. This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognise that its copyright rests with its author and that no quotation from the thesis and no information derived from it may be published without appropriate permission or acknowledgement. If you have discovered material in Aston Publications Explorer which is unlawful e.g. breaches copyright, (either yours or that of a third party) or any other law, including but not limited to those relating to patent, trademark, confidentiality, data protection, obscenity, defamation, libel, then please read our Takedown Policy and contact the service immediately.
Institution: Aston University
Uncontrolled Keywords: Bancassurance,Event study,M&A,Mergers and Acquisitions,Abnormal returns,Corporate governance
Last Modified: 08 Dec 2023 08:59
Date Deposited: 23 Dec 2022 16:26
Completed Date: 2022-05
Authors: Ondimu, Richard Mochoge

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