Influence of shareholders’ support over mergers and acquisitions in US banks

Abstract

Using data about the US banking industry, the study investigates how the support disclosed by funds in corporate meetings influences the success of the completion of mergers and acquisitions (M&A). The methodological approach relies on the use of instrumental variables with the generalised method of moments (GMM). The results indicate that the voting support exercises a negative influence over the success of M&A, validating the probable presence of agency-driven behaviour in explaining M&A completion, and indicating that low governance and activism inspires independent behaviour of managers, proceeding against the wishes, position or interests of shareholders. Considering that voting performance has been reported as a proxy for reputational harm, the results provide some understanding about how the success in M&A in the US banking industry may be related to reputational consequences infiltrated through voting decisions.