The differential effect of M&As on corporate performance: evidence from Eurozone

Abstract

This thesis examines the effect of mergers and acquisitions (M&As) on corporate performance, on a sample of 37 M&As in Eurozone between 2009 and 2013. The analysis is founded on comparisons of the corporate performance of merged firms versus a sample of non- merged firms between the pre- and post- acquisition period, using the quasi- experimental “Difference-in-Differences” methodology. I employ two earnings based and two cash flow based performance indicators, to examine how sensitive the estimated differential effect is to the type of performance metric and deflator. Moreover, i combine Difference-in-Differences with Propensity Score Matching, to control for the risk of selecting an unrepresentative sample of non- merged firms. I provide evidence that M&As improve the corporate performance of the combined firms and directly benefit the shareholders. Profitability measures, (a) return on equity and (b) return on assets, are found to increase significantly for merged firms relative to their non- merged industry counterparts in the post- acquisition period. Operating cash flow metrics, (c) operating cash flow return and (d) operating cash flow to total assets, also show that M&As have a positive differential effect on corporate performance, although weak. Further exploration of the increased efficiency of the combined companies in the post- acquisition period, shows that the improvements are due to increased accrual earnings rather than enhanced asset productivity. However, the market value of the combined entities increases significantly in the post- acquisition period, indicating that markets view M&As as value- adding transactions.

Στην παρούσα εργασία, αναλύεται ένα δείγμα 37 Εξαγορών και Συγχωνεύσεων (αναφέρονται ως Ε&Σ από εδώ και έπειτα) που ολοκληρώθηκαν την περίοδο 2009- 2013 στην Ευρωζώνη. Κύριο ερευνητικό ερώτημα είναι εάν οι Ε&Σ βελτιώνουν της απόδοση των εταιρειών, και εξετάζεται σε όρους απόδοσης κερδών και λειτουργικών ταμιακών ροών.Η έρευνα δομείται σε τέσσερις βασικές ενότητες:1. Αναφορά προηγούμενης βιβλιογραφίας με κύριο ερευνητικό ερώτημα τις Εξαγορές και Συγχωνεύσεις2. Περιγραφή του εμπειρικού σχεδιασμού της έρευνας, της διαδικασίας επιλογής του δείγματος και των δεικτών απόδοσης που επιλέχθηκαν3. Ανάλυση των εμπειρικών αποτελεσμάτων4. Συζήτηση σχετικά με τα αποτελέσματα της έρευνας και αναφορά στους περιορισμούς της