Market reaction to the formation of one-bank holding companies

This study examines the question of whether or not the formation of one-bank holding companies is of such importance as to materially affect the return generating process for the associated common stock issues. As such this study attempts to provide the security analyst with answers as to how best to define the parameters of the distribution of firm returns, that is, which past observations are relevant to the firm's present return generating mechanism. The results of the tests performed indicate that the formation of a one-bank holding company generally does not have a significant impact on the return generating mechanism for the underlying stock of the affected bank. Thus, the market does not appear to attach any real significance to this particular shift in organizational form by the commercial banks studies.