||The Performance of Target Banks After M & A: Evidence from Vietnam
||The Performance of Target Banks After M & A: Evidence from Vietnam
||Institute of International Management (IIMBA--Master)
||Vo Tuong Vy Nguyen
merger and acquisition
This study examines empirically the impact of mergers and acquisitions (M&A) on the profitability performance of M&A-involved banks in Vietnam. Using the financial characteristics, the post-merger performance of 30 Vietnamese banks that are listed at The Hochiminh Stock Exchange and Hanoi Stock Exchange and executed at least one merger and acquisition in the period from 2006 to 2009, is investigated. The type of M&A transaction in this study is that bidders acquire shares and assets of listed domestic banks and become one of the main shareholders of the targets. Selected accounting variables, or financial characteristics are the measurements of profitability performance 3 years before and 3 years after M&A transactions. The year of M&A event is omitted from comparisons. Variables like the relative size of the target to the bidder, the pre-merger performance of the bidder, the bidder’s leverage ratio and the change of target’s market share will be studied to know whether they have any influence on the post- merger profitability performance of target bank. The research found that the target overall does not have better profitability performance compared with pre-merger profitability performance. Relative size of the target to the bidder, the leverage ratio and pre-merger performance of the bidder and the change of target’s market share one year after merger are found to have certain influence on the target bank’s post-merger performance.
TABLE OF CONTENTS II
LIST OF TABLES IV
LIST OF FIGURES V
CHAPTER ONE INTRODUCTION 1
1.1 Research Background. 1
1.2 Research Objectives. 5
1.3 Research Contribution. 5
1.4 Structure of Research. 6
CHAPTER TWO LITERATURE REVIEW 7
2.1 Merger and Acquisition. 7
2.2 Banking Industry in Vietnam. 12
2.2.1 An Overview of Vietnam Banking Industry. 12
2.2.2 Merger and Acquisition Activities in Vietnam Banking Industry. 15
2.2.3 Policy for Merger and Acquisition Activities in Vietnam Banking Industry. 17
2.3 Hypotheses Development. 19
2.3.1. Performance Changes of the Target Bank. 19
2.3.2 The Determinants of Post-merger Performance of Target Bank. 22
CHAPTER THREE RESEARCH DESIGN AND METHODOLOGY 29
3.1 Data Source and Sample Construction. 29
3.2 Research Methodology. 31
3.2.1 Performance Changes of the Target Bank. 31
3.2.2 The Determinants of Post-merger Performance of Target Bank. 32
3.3 Empirical Model. 33
3.3.1 Performance Changes of the Target Bank. 33
3.3.2 The Determinants of Post-merger Performance of Target Bank. 34
CHAPTER FOUR RESEARCH RESULTS 37
4.1 Descriptive Analysis. 37
4.2 Statistical Tests Analysis. 39
4.2.1 Normality Test. 39
4.2.2 Homoscedasticity Test. 41
4.3 Regressions Analysis. 43
4.3.1 Paired t- Tests. 43
4.3.2 Regressions. 45
4.3.3 Autocorrelation Test. 49
4.3.4 Multicollinearity Test. 51
CHAPTER FIVE CONCLUSIONS 52
5.1 Conclusions. 52
5.2 Implications. 54
5.3 Limitations. 55
5.4 Suggestions. 56
Appendix 1: List of banks involved in merger and acquisition activities in Vietnam (2006-2009) 62
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