Impact of Merger and Acquisition Ex-Ante and Ex-Post Performance of Pakistani Firms

Author(s)

Bilawal Ali Soomro , Faheem-ul-Hussain Dehraj , Abdul Naveed Tariq , Zaheer Abbas Awan ,

Download Full PDF Pages: 99-111 | Views: 905 | Downloads: 260 | DOI: 10.5281/zenodo.3510091

Volume 8 - September 2019 (09)

Abstract

The research in this study looks at the Mergers and Acquisitions (M&A) and highlight insight about the  performance impact  of  both financial and non-financial firms in Pakistan by using three financial ratios of Sixteen M&A in different industries have been observed from 2006-2013 reported on Karachi Stock Exchange (KSE).For quantitative techniques,SPSS 18 and data average method was used for analysis.Annual published reports of acquiring firms for the period of six years (3 years before M&A and 3 years after) combine have been used. while the acquired or merged small firms have been excluded due to the un -aviability of data concern .The study concludes that all the hypotheses of the financial performance of firms' have been rejected and identified declinig in post-M&A performance ratios. Result shows there is significant negative decline in ROA and ROE but some significant positive improvement is shown in NPM and size of firms after combination while increase in mean of  both size and inflation rate has an significant negative effect on firms ROA and ROE ratios declined post M&A period.Over all result reveals the significant negative effect of M&A on the  efficiency of firms in the post-M&A period.It can be said that better performance after M&A is not mandatory

Keywords

Mergers, Acquisitions, Financial Performance 

References

  1. Abdul-Rehman, O., & Ayorinde, A. (2013). Post Merger Performance of Nigerine. Selected Deposit Money Banks:An Economic Perspective. International Journal of Management and Sciences , 2 (8), PP. 49-59.
  2. ACARAVCI, S., & CALIM, A. (2013). Turkish bankins sector's profitability factors. International jounal of economics and financial issues , 27-41.
  3. Aggarwal, R., & Kyaw, N. (2010). Capital structure, devident policy and multinationality: Theory versus emperical evidence. Inetrnational review of financial analysis , 19, 104-150.
  4. Ali, i. (2013). Determinant of capital structure: empirical evidence from Pakistan. 1-55.
  5. Ali, K., Akhtar, M., & Ahmed, H. (2011). Bank specific and macroeconomic indicators of profitability:Emerical evidence from commercial banks of Pakistan. International journal of Businesss and Management Science , 235-242.
  6. Almazari, A. (2014). Impact of international factors on bank profitability:comparative study between saudi arabia and jordon. Journal of applied finance and finance & banking , 125-140.
  7. Al-Sharkas, A., M.K, H., & S, L. (2008). The impact of Mergers and Acquisition on the Efficiency of the US Banking Industry. Further Evidance , Journal of Business Finance & Accounting , 35 (1 & 2), pp. 50-70.
  8. Altunbas, Y. &., & Marques, D. (2007). Merger and Acquisition and Bank Performance iin Europe. The Role of Strategic Similarities. Journal of Economics and Business,19.
  9. Amedu, S. (2004, January-March). "The corporate Takeover, Acquisition and Merger". The Nigerian Stockbroker, the Official J. Chartered Ins. Stockbrokers.
  10. Arshad, A. (2012). Post Merger Paerformance Analysis of Standard Chartered Bank Pakistan. Interdisciplinary Journal of Contemporary Research Business , 4 (6) pp. 164-173.
  11. Badreldin, A. &., & Kalhoefer, C. (2009). The Effect of Merger and Aquisition on Bank Performance in Eygypt. Working Series p. 17.
  12. Bello, M. (2004). "Mergers and Acquisitions as a strategy for Business Growth in Nigeria". Nig. J. Acct. Res., I (1).
  13. Berger, A., & Humphery, D. (1997). Efficiency of Financial Institutions: International survey and Directions for Future Research. European Journal Of Operational Research , 98 (2), PP.175-212.
  14. Booth, L., Demirguc-kunt, A., & Maksimovic, V. (2001). Capital structure in developing countries. Journal of Finance , 56, 87-130.
  15. Coopland. (2012). The Impact Of Mergers on Efficiency of Banks in Pakistan. ( Elixir International Journal), www.elixirpublishers.com .
  16. Dawood, U. (2014). Factors impacting the profitability of commercial banks in Pakistan 2009-2012. International journal of of scientific and research publication , 1-7.
  17. Duraj, B., & Moci, E. (2015). Factors influencing the bank profitability: Empirical evidence from Albania. Asian economic and financial review , 483-494.
  18. Eldomaity, T., & Ismail, M. (2009). Modeling capital structure decissions in a transition market: Emperical analysis of firm in Egypt. Review of quantitative finance and accounting , 32, 211-233.
  19. Fadzlan, S. &. (2004). Efficiency Effects of Bank Mergers and Acquisition in Developing Economy,. International Journal of Applied Econometrics and Quantitative Stuies , 1 (4), pp, 53.
  20. Frank, M., & Goyal, V. (2009). Capital structure decisions: which factrors are reliably important? . Financial Management , 38, 1-38.
  21. Goyal, D., & Joshi, V. (2012). Merger and Acquisition in Banking industry: A Case Study of ICICI Bank Ltd. International Journal of Research in Management , Vol.2 (Issue2).
  22. Haider, A., Shoaib, M., & Kanwal, S. (2015, April). Impact of Mergers on Performance of Banking Sector of Pakistan. Pakistan Business Review .
  23. Jong, A., Kabir, R., & Neguyen, T. (2008). Capital structure around the world: The roles of firm and country-specific determinants. Journal of banking and finance , 32, 1954-1969.
  24. Kathy, L. (2005). Mergers and Acquisitons. An other tool for Traders. investopedia.
  25. Kemal, M. (2011). Post-Merger Profitability: A Case of Royal Bank Of Scotland (RBS). International Journal of Business and Social Sciences , 2(4), pp. 157-162 .
  26. Koetter, M. (2005). Ealuating the Germen Bank Merger Wave". Working Paper, Utrechet School of Economocs , PP. 05-016.
  27. Kouser, R. D.-P., & Saba, I. S. (2011). Effects of Business Combination on Financial Performance: Evidance From Pakistan's Banking Sector. Australian Journal of Business and Management Research , vol.1, No. 8, 54-64.
  28. Obaid-ullah, Sabeeh-ullah, & Usman, A. (2010). Post-merger Performance of Atlas Investment and Al-Faysal Investment Bank Ltd in Pakistan. Inernational Research Journal of Finance and Economics , 60, 168-174.
  29. Onaolapo, A., Abdul, R., & Ojalaoladayo, A. (2013). Post merger performance of selected Nigerian Deposit money Bank-An economatric perspective. International journal of Management ScienceS and Business Research , 49-59.
  30. Pazarskis, M., Vogiatzogloy, M., Christodoulou, P., & & Drogalas, G. (2006). Exploring the Improvement of Corporate Performance after Merger. International Research journal of Finance and Economics,9 , pp. 184-192.
  31. Prompitak, D. (2009). The Impact of Bank Merger and Aquisition ( M&A) on Bank Behavior.P.H.D Thesis, University Of Birmingham. Pakistan Business Review April 2015 .
  32. Sinah, D., & Kaushik, K. (2010, November). Measuring Post Merger and Aquisition Performance. International Journal of Economics and Finance , 2, pp. 190-200.
  33. Titman, S., & Wessels, R. (1988). The determinant of capital structure choice. Journal of finance , 43, 1-19.
  34. Ullah, O., Ullah, S., & & Usman, A. (2010). Post Merger Performance of Atlas Investment and AL-Faysal Investment Bank Ltd in Pakistan. International Journal of Finance and Economics , pp.168-174.

Cite this Article: