The impact of ownership structure on post acquisition performance: Evidence from the Russian banking sector

Abstract

The purpose of this thesis is to investigate the profitability of Russian banking M&A and the relationship between ownership structure and post acquisition performance. Previous studies on profitability of banking M&A have focused mostly on U.S. and Western Europe. This thesis contributes to previous research by focusing on relative under-researched Russian banking sector.

The sample of this study includes 20 M&A announcements from Russian banks between the years 2005 and 2013. Event study methodology is used to investigate the market reactions following M&A announcements. Abnormal returns are calculated for 21-day long event window, starting 10 days prior the acquisition announcement and ending 10 days after the announcement. After the abnormal returns have been calculated, OLS regressions are used to investigate the factors explaining M&A success. 3-day cumulative abnormal return of the bidding bank is the dependent variable in all regressions. In addition, regression models include different ownership structure variables and a set of control variables.

Results suggest that abnormal returns for bidding banks around M&A announcements are moderately positive but statistically insignificant. Owning a stake of the target prior acquisition has a positive impact on post acquisition performance. Additionally, private ownership and geographic scope of the deal have a positive impact on post acquisition performance. The impact of ownership concentration and state ownership on post acquisition performance are found to be statistically insignificant. Finally, bank specific variables explain part of the variation in cumulative abnormal returns.