Pre &amp; Post-Merger Financial Performance: An Indian Perspective

Patel, Ritesh

doi:10.2478/jcbtp-2018-0029

Cited by 35 publications

(29 citation statements)

References 31 publications

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“…Acquisitions, according to their findings, alleviate financial frictions in acquired firms, particularly when the acquired firm is small. Patel (2018) found a negative impact of the merger on return on equity, return on assets, net profit ratio, yield on advance and yield on investment. However, variables, namely, the earnings per share, profit per employee and business per employee have shown a positive trend and grown after the merger.…”

Section: Review Of Empirical Studiesmentioning

confidence: 99%

Abnormal Returns around Mergers and Acquisitions in the Nepali Stock Market

Pathak

2021

Prithvi J. Res. Innov.

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A merger includes two relatively equal entities that are combined to form one legal entity worth more than a sum of its two separate parts. In the last few years, many Nepali financial institutions have been consolidating through mergers and acquisitions. This paper aims to investigate how the stock market reacts when financial institutions announce mergers and acquisitions. This paper also examines the impact of cross-sectional variables on the abnormal returns obtained around merger announcements. The study covers 22 successful merger deals that occurred among 48 financial institutions over the period of 2004 to 2013. This paper used the event study method based on the market model to derive abnormal returns associated around the merger announcement date. The event dates are specified as the dates on which the mergers and acquisitions were announced. The results show that leaving a very few exceptional cases, none of the merged financial institutions received significant cumulative abnormal returns on the merger announcements, regardless of the use of different event periods. The cross-sectional regressions show that the pre-merger performance of target and relative market value are the significant influencing variables on acquirers' cumulative abnormal returns. The finding implies that Nepali financial institutions merge merely to increase their capital base without producing any synergistic effect. Therefore, they need strategic plans for choosing the right partner and achieving other benefits like synergy effect, economies of scale and cost reduction from mergers and acquisitions.

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Section: Review Of Empirical Studiesmentioning

confidence: 99%

Abnormal Returns around Mergers and Acquisitions in the Nepali Stock Market

Pathak

2021

Prithvi J. Res. Innov.

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“…In addition, previous studies do not give a consistent verdict regarding the effect of acquisition on firms' performance. The study by Patel (2018) indicates that acquisitions lead to a decline in performance, while those by Mwanza (2016) and Ombaka and Jagongo (2018) suggest that acquisition activities result in improved performance. Furthermore, most of these studies have assessed performance from a financial perspective ignoring other aspects such as operational efficiency, customer experiences, and learning and growth.…”

Section: Statement Of the Problemmentioning

confidence: 99%

Influence of Degree of Integration on Post-Acquisition Business Performance at Coca Cola Beverages Africa, Kenya

Sande¹,

Karanja²,

Wagoki³

2020

theijbm

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Influence of Degree of Integration on Post-Acquisition Business Performance at Coca Cola Beverages Africa, Kenya 1. Introduction Acquisitions as a component of strategic management are known to be a critical aspect of business value creation tools, specifically as a growth and stability strategy where there is an indication of growth and / or business performance challenges or when simply applied as a means of gaining access to new markets (Hacklin, Bjorkdahl, & Wallin, 2018). Acquisition entails purchase of one company by another and controlling over 50% equity of the target firm (KPMG, 2016). It enables companies to grow faster than competition, reduce administration costs, assume additional market share, enhance economy of scale, and increase returns for shareholders (Wanjiku, 2017). Acquisitions as well as mergers have become popular business growth strategy. According to the Institute of Mergers Acquisition and Alliances (2019) an estimated 790,000 acquisition and mergers transactions were completed worldwide between 2000 and 2019 with a value of over US $57 trillion. A total of 49,000 M&A transactions were completed in 2018 amounting to US$ 3.8 trillion. The US had the largest number of acquisition and merger transactions in 2018 numbering 14,767 with a value of US$ 1.8 trillion. A survey by Deloitte (2019) in the United States found that 79% of respondents expected the number of M&A transactions to increase in 2019 owing to relaxed regulating climate, tax reform, and growing cash reserves. In the Deloitte (2019) survey, the success of acquisitions and mergers was linked to various factors including effectiveness of the integration process (according to 23% of respondents), economic environment (19%), accurate valuation of target (18%), stability of legal regulatory environment (16%), proper identification of target (14%), and proper due diligence (11%) (Deloitte, 2019). In Europe, the UK was leading with 4,355 M&A transactions worth US$423 billion while in 2018 (Institute of Mergers Acquisition and Alliances, 2019). Germany had 2,117 transactions worth US$141 billion while France 2,113 transactions worth US$150 billion. The rise in the number of M&A transactions in recent decades is largely attributed to the gradual integration of European countries into the EU bloc making cross-border mergers and acquisitions easier (Dutcik, 2017). There has also been a spike in the number of acquisition and merger transactions within the emerging countries.

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“…Another premise stated that there was a noteworthy influence of the consolidation announcement on the bidder's closing stock price or 1250 Pre-and Post-Merger Financial Analysis of Banks acquiring bank. It was concluded that there was no noteworthy impact of the merger announcement on the share price changes before and after the consolidation declaration [9].…”

Section: Literature Reviewmentioning

confidence: 99%