Ross Levine, Chen Lin, Zigan Wang, 26 June 2017

While the causes and consequences of mergers have received a lot of scholarly attention, geographic factors have thus far been neglected. Using US data, this column argues that greater geographic overlap of the subsidiaries and branches of two bank holding companies increases the likelihood of the two merging, and also boosts the cumulative abnormal returns of the acquirer, target, and merged companies. It also discusses how network overlap can affect synergies and value creation.

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