Mergers benefit CEOs more than investors.

National banks involved in the most recent wave of mega-mergers may be touting benefits to shareholders and depositors, but research by Richard J. Rosen, assistant professor of finance, Indiana University, Bloomington, indicates that financial returns to stockholders of the acquiring banks aren't much different than those of the average bank. In fact, the ones who may benefit the most from such mergers are those in the banks' top management. "When we hear about mergers providing all of these great efficiencies, they may, but that doesn't seem to be reflected in the stock price three or four years after the merger is announced or completed. Whatever benefits there are don't seem to be passed on to shareholders in the acquiring bank."

In one hypothetical example of a merger involving two banks---one with assets of $50,000,000,000, the other with $15,000,000,000--the CEO of the larger, acquiring bank would receive $1,600,000 in cash compensation and an additional $1,100,000 in other compensation, for total compensation of $2,700,000. By acquiring the $15,000,000,000 bank, the CEO could expect his cash compensation to rise by...