By:
                              Amanda Rae Heitz

   Abstract: Using a proprietary database of failed bank auction
   participants, I examine whether acquiring a failed bank creates
   shareholder value by using the losers’ post-acquisition performance as
   a counterfactual. While the market responds favorably to all failed
   bank acquisition announcements, in the three years post-acquisition,
   acquirers with Shared-Loss Agreements (SLAs), where the FDIC absorbs
   approximately 80% of losses, realize abnormal returns that are 19.8%
   lower than auction losers. Inconsistent with the effects of a winner’s
   curse, abnormal returns are not related to bidder competition. However,
   acquirers with SLAs have less lending risk than both failed bank
   auction losers and winners without SLAs, suggesting that the reduction
   in risk stemming from SLAs plays a role in explaining the divergence in
   long-run abnormal returns.


   The working paper is posted
   at [1]https://www.fdic.gov/analysis/cfr/working-papers/2022/cfr-wp2022-
   01.pdf
   --
   Gunnar Larson - [2]xNY.io | [3]Bank.org
   [4]MSc - Digital Currency
   [5]MBA - Entrepreneurship and Innovation (ip)
   G@xNY.io
   +1-646-454-9107
   New York, New York 10001

References

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   3. http://Bank.org/
   4. https://www.unic.ac.cy/blockchain/msc-digital-currency/?utm_source=Google&utm_medium=Search&utm_campaign=MSc-Digital-Currency-North-America&utm_term=blockchain unic&gclid=Cj0KCQiAyJOBBhDCARIsAJG2h5ctwwMz0MRbVSk-LaYD-GMU5UgDSw7ynxbGr_a7SkaFAZzJc1-pzxEaAi4NEALw_wcB
   5. https://www.unic.ac.cy/business-administration-entrepreneurship-and-innovation-mba-1-5-years-or-3-semesters/