The bank mergers of the 1990s often triggered upward adjustments in reported depreciation and goodwill amortization expenses, apart from any change in actual costs, due to the conventions of purchase accounting. Thus, conventional measurements underestimated the sizeable and long-lasting reductions in non-interest costs achieved following mergers.The largest reductions in reported post-merger bank costs occurred in labor expenses, which were not subject to accounting revaluations. Reported premises expenses jell considerably less than that of labor when buildings were revalued. Other non-interest expenses rose, partly because amortization increased due to the additional goodwill generated by mergers.
Kwan, S. and Wilcox, J. (2002), "Hidden cost reductions in bank mergers: Accounting for more productive banks", Research in Finance (Research in Finance, Vol. 19), Emerald Group Publishing Limited, Bingley, pp. 109-124. https://doi.org/10.1016/S0196-3821(02)19006-XDownload as .RIS
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