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Journal articles on the topic 'Merger of accounting'
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1
Pazarskis, Michail, Manthos Vogiatzoglou, Andreas Koutoupis, and George Drogalas. "CORPORATE MERGERS AND ACCOUNTING PERFORMANCE DURING A PERIOD OF ECONOMIC CRISIS: EVIDENCE FROM GREECE." Journal of Business Economics and Management 22, no. 3 (February 18, 2021): 577–95. http://dx.doi.org/10.3846/jbem.2021.13911.
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Merger deals are one of the most important business strategies which can change the company value dramatically. Mergers have been constantly a subject of debate and analysis over the past decades. Thus, it is a matter of great interest to analyze merger activities during economic crisis periods, as it was in Greece recently. This paper explores the accounting performance of Greek listed companies after mergers in 2009–2015, the economic crisis period in Greece. Thus, all mergers of listed companies during the above period are initially examined through several financial ratios from financial statements for one year before and after the merger. The analysis of Greek listed companies that comprise the final sample is performed with several regression models. The study provides positive and statistically significant results for mergers, in the sense that the period of crisis that the merger took place is positively correlated with several performance measures. Regarding the industry relatedness, the study provides evidence that conglomerate mergers have more positive impact to the improvement of the companies’ profitability than non-conglomerate mergers. Last, for the merger events that take place far from the climax of the economic crisis, the profitability of merged companies is increased.
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Ivancevich, Susan H., and Asghar Zardkoohi. "An Exploratory Analysis of the 1989 Accounting Firm Megamergers." Accounting Horizons 14, no. 4 (December 1, 2000): 389–401. http://dx.doi.org/10.2308/acch.2000.14.4.389.
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The 1989 “megamergers” (creating Ernst & Young and Deloitte & Touche), as well as recent merger activity within the accounting profession, have attracted widespread attention from regulators. Given the magnitude of such mergers, and the regulatory interest generated by them, it becomes increasingly important to understand the impact that such mergers have within the public accounting market. This study is a descriptive exploratory investigation into the effects of the 1989 mergers. Data for the firms involved in the mergers were compared to data for competitor firms not involved in the mergers (direct rivals) to help to control for the effect of market forces. The post-merger period was characterized by a slight decline in market share for the merged firms compared to their direct rivals, a decline in audit price for both groups, and a decrease in factor costs for the merged firms relative to their direct rivals. The results of data analysis are consistent with the premise that 1989 megamergers predominantly resulted in increased efficiencies within the audit market that were then passed through to end-users in the form of lower prices. Further study is needed to determine whether these efficiencies within the audit market were offset by market power influences in nonaudit services.
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Pantelidis, Panagiotis, Michail Pazarskis, George Drogalas, and Stavroula Zezou. "Managerial decisions and accounting performance following mergers in Greece." Investment Management and Financial Innovations 15, no. 1 (March 15, 2018): 263–76. http://dx.doi.org/10.21511/imfi.15(1).2018.22.
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An investigation was conducted to study a sample of 23 Greek firms listed on the Athens Stock Exchange that underwent mergers from 2011 to 2015, which is a period that embodies the Greek economic crisis. For the investigation, the authors use statistical tests to explore relative changes at twenty accounting ratios of the sample firms. These ratios are computed for one year before and after the merger. These ratios are found to be statistically insignificant indicating firms do not experience a post-merger improvement in accounting performance. The authors also examine six qualitative variables representing merger characteristics as past managerial decisions. Important findings for these characteristics include the following. First, for companies that do not fall under the same production line, the researchers observe an improvement for three ratios: collection period ratio, return on total assets, and profit or loss before tax. Thus, liquidity and profitability are improved. Second, when companies merged with their subsidiaries, the authors discover significant improvement for two ratios: gross margin and collection period ratio. In brief, positive results are found for mergers with subsidiaries and negative results with others. Third, the payment method influences two ratios, the current ratio and the stock turnover ratio. The current ratio is affected positively for the transactions in cash and negatively for the transactions in shares, while the stock turnover ratio is affected negatively for cash transactions and positively for share transactions.
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Osarenkhoe, Aihie, and Akmal Hyder. "Marriage for better or for worse? Towards an analytical framework to manage post-merger integration process." Business Process Management Journal 21, no. 4 (July 6, 2015): 857–87. http://dx.doi.org/10.1108/bpmj-07-2014-0070.
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Purpose – A review of extant literatures shows that most mergers fail during the integration process. Little is known about how the realization of operating synergies and dissemination of available know-how in the merged firm are managed in the post-merger phase. The purpose of this paper is to provide insights on the process of integrating operating synergies by focusing on the critical success factors that facilitate integration of the skills of merged banks. Design/methodology/approach – The authors draw on three research traditions in merger literature and reconcile them with three dimensions of integration. In-depth interviews were conducted with Nordea managers from four Nordic countries. Findings – Having learned from the mistakes of previous mergers, Nordea’s “guiding star” for managing its post-merger integration process was expressed as focus, speed and performance from top management. A hands-on leadership style, vision-led thinking, a bias for action, involvement of the entire staff, continuous focus on customers, open and honest communication with employees are critical to success. Practical implications – The motive for a merger has an important impact on the degree of interaction and degree of integration. The authors expand on previous findings by, among other things, synthesizing three theoretical lenses into an integrative model, and addresses post-merger issues with a sharp eye towards clear managerial relevance. Originality/value – The authors respond to the call to expand inter-firm relationships study beyond the narrow dyadic relationship focus and not solely conceptualize mergers as one of companies’ entry modes to implement mechanistic growth strategy. The three dimensions of integration imbued with three research traditions in merger literature provides us with a conceptual lens to conceive mergers also as engines for change emerging from the merged firms to enhance a bespoke performance of their business process.
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Pazarskis, Michail, Andreas Koutoupis, Georgia Pazarzi, and Panagiotis Kyriakogkonas. "Managing mergers in a difficult era: Stock market and accounting evidence from Greece." Risk Governance and Control: Financial Markets and Institutions 8, no. 4 (December 28, 2018): 16–21. http://dx.doi.org/10.22495/rgcv8i4p2.
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The study examines the impact of mergers on stock market and performance of companies which were involved at mergers in Greece. Thus, the study, by using a sample of twenty-three listed companies which executed at least one merger (as acquirers) during the period of economic crisis, analyses nine stock market measures and ratios using simultaneously accounting measures extracted from corresponding financial statements. More specifically, we test a company’s performance by comparing a two-year span period before and after of all the merger events that took place within the period 2011-2015 (with data analysis from 2009 to 2017). The results of the study indicated that there is no statistically significant improvement or worsening for none of the examined variables in the post-merger period. In addition, we examined further merger characteristics, such as the method of payment and industry relatedness (qualitative variables). We observed statistically significant changes of a variable, in relation with the payment method, and in particular improvement of a variable when the exchange of shares is used as a payment method of a merger, instead of cash exchange.
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Pazarski, Michail, Panagiotis Pantelidis, Alexandros Alexandrakis, and Panagiotis Serifis. "Successful merger decisions in Greece: Facts or delusions?" Corporate Ownership and Control 11, no. 2 (2014): 708–17. http://dx.doi.org/10.22495/cocv11i2c7p4.
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This study examines the success of merger decision in Greece during the last years through an extensive accounting study. The events of mergers and acquisitions (M&As) that have been performed from all merger-involved firms listed on the Athens Stock Exchange in the period from 2005 to 2007 are evaluated using accounting data (financial ratios), and from them the final sample of the study that is finally investigated consists from thirty five Greek firms, which executed one merger or acquisition in the period from 2005 to 2007 as acquirers and have not performed any other important acquiring decision in a three-year-period before or after the examined M&As transactions. For the purpose of the study, a set of sixteen ratios is employed, in order to measure firms’ post-merger performance and to compare pre- and post-merger performance for three years (or two years or one year) before and after the M&As announcements (with data analysis from 2002 to 2010). Furthermore the impact of the means of payment, of international or domestic M&As and of conglomerate or non-conglomerate mergers are evaluated. The results revealed that mergers have not any impact on the post-merger performance of the acquiring firms. Thus, the final conclusion that conducted is that the M&As activities of the Greek listed firms of this research have not lead them to enhanced post-merger accounting performance. Last, from the research results, it is clear that there is no difference from the mean of payment (cash or stock exchange) on the post-merger performance at the acquiring firms, and there is a better performance for international and conglomerate M&As.
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Faisal Khan, Abu Naiahn, Kabir Hassan, Neal Maroney, and Jose Francisco Rubio. "Efficiency, Value addition and performance of US bank mergers." Corporate Ownership and Control 14, no. 1 (2016): 59–72. http://dx.doi.org/10.22495/cocv14i1p6.
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There is little consensus regarding the overall performance of mergers and acquisitions in the banking industry. The goal of this paper is to investigate the change in operating performance, efficiency, and value addition of US bank mergers and acquisitions after GLBA. We extend the previous research by combining all the previous methodologies used in mergers and acquisitions studies and add a new methodology, namely Expected EVA improvement. We will test whether these performance metrics yield similar results or if the performance of mergers varies depending on the measurements. We will also examine the factors that have significant impact on changes in bank performance. Our empirical results lead to the conclusion that the industry-adjusted operating performance of merged banks increases significantly after a merger. This finding is consistent with the findings of Cornett et al. (2006).We also find that the acquirer expected EVA improvement increases significantly after a merger. Revenue enhancement opportunity appears to be more profitable if there exists more opportunity for cost cutting such as geographically focused and diversified mergers. Product diversification mergers increase the industry adjusted performance more than product focused mergers. The efficiency or profitability of targets have either a positive or no effect on acquirer performance.
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Paul, Donna L. "Board changes following mergers." Corporate Ownership and Control 5, no. 3 (2008): 67–74. http://dx.doi.org/10.22495/cocv5i3p8.
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This study documents an overall increase in board independence and size following completed mergers. The increase in board size is positively related to the size of the target firm, suggesting either that large targets have bargaining power to negotiate inclusion of their directors on the board of the merged firm, or that high target director representation is perceived to be vital in mergers of equals. The change in board independence is positively related to post-merger cash flow difficulty, suggesting that independent directors are more likely to be added if the firm faces financial constraints.
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Brahma, Sanjukta, Agyenim Boateng, and Sardar Ahmad. "Motives of mergers and acquisitions in the European public utilities." International Journal of Public Sector Management 31, no. 5 (July 9, 2018): 599–616. http://dx.doi.org/10.1108/ijpsm-01-2017-0024.
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Purpose The purpose of this paper is to investigate the motivation and post-merger operating performance (OP) of European utility sectors following mergers and acquisitions (M&A). Design/methodology/approach Motives behind M&A are examined by looking into the relationships between total gains, target gains and acquirer gains. Post-merger OP is measured by comparing the sample of European utilities with a matched portfolio based on size and market to book ratio with respect to five accounting indicators: growth in turnover, growth in earnings before interest and tax, return on assets, net profit margin and growth in fixed assets. Findings Synergy is the primary motive for M&A in the European utility firms. This study also found that post-merger OP is negative and significant across all the five accounting indicators matched by size, and market to book ratio suggesting that utility mergers underperform in the long term. The findings suggest that gains accruing to utilities involved in acquisitions are short term in nature. Practical implications Negative post-merger OP bears important policy implications as in future antitrust/competition authorities should be more vigilant before approving utility mergers. Originality/value Public utilities possess several characteristics that are different from industrial firms and therefore need to be examined separately. Empirical literature on M&A is very limited on utilities. This study has addressed this gap by examining the motivation and post-merger OP of the European utility firms.
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Sedláček, Jaroslav, Petr Valouch, and Maria Králová. "ECONOMIC EFFICIENCY OF MERGERS IN THE CZECH REPUBLIC 2001–2010." Technological and Economic Development of Economy 19, Supplement_1 (January 28, 2014): S326—S341. http://dx.doi.org/10.3846/20294913.2014.880084.
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The paper presents partial results of research focusing on accounting, taxation and legal aspects of mergers in the Czech market. The input source is a database of mergers implemented in the Czech territory, which compiles data taken from the Trade Register for the decade of 2001–2010. The structure of the data allows for an evaluation of development trends of mergers in the Czech market, analysis of economic consequences of mergers and finding possible causes of their success or failure. From economic characteristics of merger success, we have chosen the item of net assets. Statistical testing of the hypothesis proved that mergers do not affect net assets during the period of three years after the merger implementation. A significant dependence of net assets development on mergers was proved after the basic set was stratified based on the size of companies. Mergers have a positive effect on the growth of value for owners in the group of small enterprises in the third year after the merger; the value in the group of medium enterprises also grows, but not significantly. Regarding large enterprises, the net assets even decreased in consequence of a merger.
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Grossi, Giuseppe, and Patricia Bachiller. "Corporate governance models and their impact on financial performance. Evidence from Italian utility listed companies." Corporate Ownership and Control 9, no. 3 (2012): 43–51. http://dx.doi.org/10.22495/cocv9i3art3.
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This paper analyses the theme of the corporate governance models of Italian utilities companies and explores how the changes of ownership structure after a merger affects financial performance. The objective of this paper is to study whether the mergers of utilities are effective for companies to be more competitive. We compare the financial performance of four Italian utility listed companies listed (A2A, IRIDE, HERA and ENIA) before and after the merger. Specifically we analyse six financial ratios (P/L for period, Profit margin, EBITDA, ROE, ROA and Gearing). Our results show that utility mergers are effective to create a more competitive firm because of the changes in the ownership of the company and consequently in the corporate governance system. Results also indicate that a listed merger company has a higher financial performance those pre-merger companies.
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Hviid, Morten, and Canice Prendergast. "Merger Failure and Merger Profitability." Journal of Industrial Economics 41, no. 4 (December 1993): 371. http://dx.doi.org/10.2307/2950598.
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Rathinasamy, R. S., Ronald E. Shrieves, and C. R. Krishna-Swamy. "Corporate mergers and the impact if pre-merger variance, leverage and maturity of bonds on wealth transfers." Corporate Ownership and Control 4, no. 4 (2007): 125–39. http://dx.doi.org/10.22495/cocv4i4p10.
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This paper addresses several hypotheses concerning wealth transfers among bondholders and stockholders in two firms which merge. In so doing, several refinements relative to the previous research in this area are introduced. We find evidence which supports the presence of diversification effects (coinsurance) to some bondholders, incentive effects (risk increases) to other bondholders, and wealth transfers between stockholders and bondholders. This study examines the impact of 49 industrial mergers between 1970 through 1984 on the returns to bondholders and stockholders of the merging firms. Results indicate that bondholders of the acquired firm group gain significantly in the announcement month, suggesting a diversification effect for acquired firm bondholders. Acquiring firm bondholders suffer significant losses in the pre-announcement month supporting the incentive effects hypothesis for the acquiring firm bondholders. Further analysis indicates that abnormal returns to bondholders are greater for firms with high variance and high leverage pre-merger. We do not find any direct evidence that differences in maturity of merging firms’ bonds have a significant impact on merger-related bondholder returns. We find evidence of wealth transfers between stockholders and bondholders of merging firms and some support for the theory that bondholder returns are negatively related to the pre-merger correlation between cash flows of the merging firms. In total, the empirical findings enable more definitive conclusions regarding the wealth effects of mergers on important classes of claimholders of merging firms, and buttress the theoretical developments relating to wealth transfers among those claimholders.
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Langová, Veronika, Jana Gláserová, and Milena Otavová. "Significant Aspects of the National Mergers in the Czech Republic." Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis 66, no. 1 (2018): 283–91. http://dx.doi.org/10.11118/actaun201866010283.
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The paper deals with issues of national mergers carried out in the year 2015 and 2016. The development of the mergers is characterized by the fact that it is a multidisciplinary areas (tax, accounting and legal), in practice the most widespread method is Mergers through consolidation. The analysis is therefore focused just on this type of merger. It examines the development of mergers carried out in the Czech Republic as well as globally. In the global perspective,is processed the number of mergers and acquisitions, and the trends in company transformations are monitored. For the Czech Republic is analyzed the number of mergers, number of merging companies, including their legal form, the number of registered mergers by individual Regional Courts, the date of entries, determination of the appointed date of merger and date of completion of merger project. Consequently are presented features typical of the implementation of national mergers. The paper also examines the relationship between the number of mergers and GDP and PX index from 2002 to 2016.
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Haw, In-Mu, Kooyul Jung, and William Ruland. "The Accuracy of Financial Analysts' Forecasts after Mergers." Journal of Accounting, Auditing & Finance 9, no. 3 (July 1994): 465–83. http://dx.doi.org/10.1177/0148558x9400900306.
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This paper examines forecasts developed by financial analysts before and after mergers. The study finds that forecast accuracy decreases sharply after mergers. These accuracy reductions tend to be more pronounced when financial leverage changes, when the merger does not provide earnings or industry diversification, when the purchase method of accounting is used to record the transaction, when capital intensity changes, and when the size of the target corporation is large compared to the size of the acquiring corporation. The data also show that reductions in forecast accuracy after mergers tend to be temporary. Accuracy returns to approximately the premerger level within four years after the merger. The study also finds that overprediction bias increases sharply in the year immediately following the merger. This increase in over-prediction bias, however, is also temporary. Overprediction bias returns to approximately the premerger level within the four-year postmerger study period.
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Sedláček, Jaroslav, Petr Valouch, and Alois Konečný. "Synergic motives and economic success of mergers of Czech companies." Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis 61, no. 7 (2013): 2721–27. http://dx.doi.org/10.11118/actaun201361072721.
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One of the motives for mergers and acquisitions is the synergy effect, which can take several forms. This paper tries to find out whether mergers implemented at the Czech market bring positive or negative synergies. The basis of our investigation is the database of the companies that implemented a merger within 2001–2009; out of these, the companies that published their financial statements in a digitalized form were selected. We monitored the development of six indicators characterizing the economic status of a company. The values of these indicators were compared for all participating companies before the merger and for the successor company three years after the merger. The hypotheses were formulated so that they expressed an expectation of a positive synergy brought about by mergers. However, hypothesis testing has not provided a clear result. A positive effect of a merger on the key indicator of net assets, whose growth means an increase in the accounting value of the company after the merger, has been proved for small and medium-sized companies only. The effect of mergers on the increase in indicators has been confirmed for retained earnings from past years and personal costs. Further research will concentrate on the relations between the indicators with the aim to create an integral indicator for the economic success of mergers.
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Pazarskis, Michail, Despoina Charalampidou, Panagiotis Pantelidi, and Dimitrios Paschaloudis. "Examining bank mergers and acquisitions in Greece before the outbreak of the sovereign debt crisis." Corporate Ownership and Control 11, no. 4 (2014): 171–83. http://dx.doi.org/10.22495/cocv11i4c1p2.
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In this study Mergers and Acquisitions (M&As) and business performance of banks in Greece are examined through an accounting approach. Using accounting data (financial ratios), the post-merger performance of a sample of Greek banks, listed on the Athens Stock Exchange that executed at least one merger or acquisition in the four-year-period from 2004 to 2007, is investigated. For the purpose of the study, a set of nineteen ratios is employed, in order to measure banks’ operating performance and to compare pre- and post-merger performance for three, two and one year before and after the M&A. The results revealed that M&As had a positive impact on the post-merger performance of merger-involved firms, except of dividend policy, which had to be moderate and conservative, because of the global financial crisis. The results showed that the effect of M&As on sample’s business performance, is not direct, but it becomes obvious during the next two years. Last, the number of ratios, which are statistically and significantly changed, is bigger as the control interval widens and the common ratios have an identical variation.
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Oh, Sang Hoon, Shin Ha You, and Sa Seon Hong. "Efficiency of Accounting Firms by Merger." Academic Society of Global Business Administration 16, no. 6 (December 30, 2019): 87–107. http://dx.doi.org/10.38115/asgba.2019.16.6.87.
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Vomáčková, Hana. "General conception accounting for legal merger." Český finanční a účetní časopis 2006, no. 2 (June 1, 2006): 95–115. http://dx.doi.org/10.18267/j.cfuc.153.
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Shaban, Osama Samih, Zaid Al-hawatmah, and Ahmad Adel Abdallah. "Mergers and acquisitions in Jordan: Its motives and influence on company financial performance and stock market price." Corporate Ownership and Control 16, no. 2 (2019): 67–72. http://dx.doi.org/10.22495/cocv16i2art7.
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This research paper focuses on recent business trend in Jordan which attracted us as researchers to investigate Merger & Acquisition’s ability to create and realize more value than the parties can alone, and whether the value earned by the merged firms have motivated them to contribute to the combination. The method used to analyze post-merger financial performance was carried out by adopting the accounting return method and the stock price method, which measures and observes the stock market price in terms of market value, earnings per share (EPS), and price earnings ratio (P/E) of the merged firms. Analyzing the annual reports of the two Jordanian banks, the study concluded that the ratio analysis of AJIB and Safwa Bank show different trends after Merger & Acquisition. Our analysis shows decreasing values in the first two years after the acquisition, but gradually increasing values in subsequent years. The study concluded that the fluctuation of results may be attributed to the difficulties in managing the increased volume of assets after the merger as well as to non-financial reasons such as the human behavior of the employee resistance after the acquisition, where the employees of the acquired firm consider merger as a hostile takeover.
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Ekimov, Alexander V. "THE PROFITABILITY AND RISK EFFECTS OF RUSSIAN BANKING INSTITUTIONS’ INVOLVEMENT IN BANCASSURANCE: MERGER SIMULATION METHODOLOGY." Ekonomika 96, no. 3 (January 31, 2018): 56–72. http://dx.doi.org/10.15388/ekon.2017.3.11567.
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This paper presents the methodology taken to evaluate the potential profitability and risk effects of Russian banking institutions’ involvement in bancassurance. An original methodology is applied, which was developed by Boyd and Graham, to conduct merger simulations between commercial banks and insurance companies. The methodology is based on mergers between firms, like the accounting principle of consolidation by pooling. This principle entails summing up the balance-sheet indicators of previously independent firms to simulate a hypothetical merger.
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Sidhu, Jasvinder, Peta Stevenson-Clarke, Mahesh Joshi, and Abdel Halabi. "Failure to unify Australia’s leading accounting professional bodies." Journal of Management History 26, no. 4 (May 22, 2020): 491–514. http://dx.doi.org/10.1108/jmh-07-2019-0046.
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Purpose The purpose of this paper is to provide a historical account of four unsuccessful merger attempts between Australia’s two major professional accounting bodies over a 30-year period (1969 to 1998), each of which ultimately failed. An analysis of the commonalities and differences across the four attempts is provided and social identity theory is used to explain the differences between members level of support for these merger bids. Design/methodology/approach This study adopts a qualitative approach using a historical research methodology to source surviving business records from public archives and other data gathered from oral history interviews. Findings The study found that, across all four merger attempts between Australia’s two professional accounting bodies, there was strong support from society members (the perceived lower-status group) and opposition exhibited by institute members (the perceived higher-status group). This study also found that the perceived higher-status organisation always initiated merger discussions, while its members rejected the proposals in the members’ vote. Research limitations/implications This paper focusses on the Australian accounting profession, considering a historical account of merger attempts. Further research is required that includes interviews and surveys of those involved in making decisions regarding merger attempts. Originality/value This paper is the first to examine in detail these four unsuccessful merger attempts between the largest accounting organisations in Australia.
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Kimbrough, Michael D., and Henock Louis. "Voluntary Disclosure to Influence Investor Reactions to Merger Announcements: An Examination of Conference Calls." Accounting Review 86, no. 2 (March 1, 2011): 637–67. http://dx.doi.org/10.2308/accr.00000022.
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ABSTRACT: We find that bidders are more likely to hold conference calls at merger announcements when the mergers are financed with stock and when the transactions are large. After controlling for endogeneity, we also find that conference calls are associated with more favorable market reactions to merger announcements. A content analysis of merger-related information releases for a limited subsample indicates that the more favorable reaction is related to the fact that, compared to press releases, conference calls provide a greater volume of information and place greater emphasis on forward-looking details. We find no evidence that the superior announcement returns associated with conference calls subsequently reverse or that conference calls are positively associated with pre-merger announcement abnormal accruals. Overall, the results suggest that managers use conference calls around merger announcements to credibly convey favorable private information to the market.
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Shawver, Tara J. "Merger Premium Predictions Using a Neural Network Approach." Journal of Emerging Technologies in Accounting 2, no. 1 (January 1, 2005): 61–72. http://dx.doi.org/10.2308/jeta.2005.2.1.61.
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Over 80 percent of mergers fail to achieve projected financial, strategic, and operational synergies (Marks and Mirvis 2001). It is critical for management to find accurate models to price merger premiums. Management has an interest to protect stakeholders by acquiring companies that can add value to their investments at the most favorable price. Published studies in the area of pricing mergers have not attempted to use expert systems in the decision-making process. This paper is the first of its kind that describes the development and testing of neural network models for predicting bank merger premiums accurately. A neural network prediction model provides a tool that can filter through noise and recognize patterns in complicated financial relationships. The results confirm that a neural network approach provides more explanation between the dependent and independent financial variables in the model than a traditional regression model. The higher level of accuracy provided by a neural network approach can provide practitioners with a competitive advantage in pricing merger offers.
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Sørgard, Lars. "From Research on Mergers to Merger Policy." International Journal of the Economics of Business 21, no. 1 (January 2, 2014): 37–42. http://dx.doi.org/10.1080/13571516.2013.864119.
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Alsharairi, Malek, Emma L. Black, Christoph Hofer, and Radhi Al-Hamadeen. "The post-merger performance of the European M&As: Does pre-merger earnings management matter?" Corporate Ownership and Control 13, no. 1 (2015): 994–1005. http://dx.doi.org/10.22495/cocv13i1c9p3.
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This paper empirically examines the post-merger performance of a sample of 1,320 European mergers and acquisitions deals. Specifically, we investigate the impact of pre-merger earnings management of acquirers on both the short-term and long-term post-merger performance, for M&A deals completed between 2003-2012, considering both the form of payment and the target firm’s listing status. The findings suggest that acquirers report higher abnormal accruals before those deals where they pay with their stock and the target firms are private. The reported evidence suggests that, as a consequence, investors correct for these efforts in the long-term post-merger period – usually within the first 12 months. Moreover, acquirers are likely to experience positive abnormal returns in case of bidding for private targets, whereas negative abnormal returns are documented in case of a publicly traded target, respectively.
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Lambrides, Erini L., Duncan J. Watts, Marco Chiaberge, Kirill Tchernyshyov, Allison Kirkpatrick, Eileen T. Meyer, Timothy Heckman, et al. "Merger or Not: Accounting for Human Biases in Identifying Galactic Merger Signatures." Astrophysical Journal 919, no. 1 (September 1, 2021): 43. http://dx.doi.org/10.3847/1538-4357/ac0fdf.
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Mao, Juan, and Qin Jennifer Yin. "Auditor Reverse-Merger Expertise: Evidence from Chinese Reverse-Merger Companies." AUDITING: A Journal of Practice & Theory 36, no. 4 (February 1, 2017): 115–33. http://dx.doi.org/10.2308/ajpt-51690.
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SUMMARY This study investigates if hiring auditors with Chinese reverse-merger expertise affected 182 Chinese companies that executed reverse mergers with U.S. shell companies from 2003 to 2011 to become U.S. publicly traded companies (Chinese reverse-merger companies, or CRM companies). We find that CRM companies that employ CRM-expert auditors pay higher audit fee premiums, and are more likely to up-list to national exchanges, when they are compared to CRM companies with non-CRM-expert auditors. Additional analyses suggest that clients of CRM experts also are more likely to file annual financial reports on time, but CRM-expert auditors are not associated with fewer misstatements in financial reporting or continued trading on national exchanges. This suggests that CRM-specialist auditors help clients navigate regulatory requirements for up-listing, but they do not achieve improved financial reporting quality.
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Aleksandrov, Igor, Marina Fedorova, and Aleksey Parshukov. "Effectiveness of integration transactions of companies in the environmental sector." E3S Web of Conferences 244 (2021): 10048. http://dx.doi.org/10.1051/e3sconf/202124410048.
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This article is aimed at improving the processes of evaluation by enterprises of the agro-industrial complex of planned decisions on acquisitions and mergers. The work is based on the analysis of integration evaluation problems, known approaches to their solution, and the development of the conceptual framework for evaluating these transactions. The article offers a method developed by the authors to assess the effectiveness of merger processes. The proposed method for evaluating mergers is developed on the basis of assessing the change in the company’s potential after the merger. The assessment of potential changes resulting from the implementation of integration projects will allow assessing the economic impact of merger options, taking into account the environmental consequences for the territory. The proposed method is aimed at more accurate accounting of changes in the intangible assets of the combined company as a result of integration. Rationalizing the evaluation of the effectiveness of mergers will allow the owners of the evaluated companies to improve the quality of preparation of integration transactions and reduce the risks of making inefficient decisions.
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Madura, Jeff, and Thanh Ngo. "How accounting fraud has changed merger valuation." Applied Financial Economics 20, no. 12 (June 2010): 923–40. http://dx.doi.org/10.1080/09603101003724299.
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Watson, Robert. "The liquidation/merger alternative." British Accounting Review 22, no. 4 (December 1990): 398–400. http://dx.doi.org/10.1016/0890-8389(90)90105-q.
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Pathak, Hari Prasad. "Post-merger Effect on Operating Performance of Financial Institutions: Evidence from Nepal." REPOSITIONING The Journal of Business and Hospitality 1 (November 20, 2016): 11–22. http://dx.doi.org/10.3126/repos.v1i0.16039.
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This article studies post-merger operating performance of financial institutions using the data set published in their annual reports. Based on 22 merger deals made during 2004-20013 by financial institutions listed in the Nepal Stock Exchange, this paper analyzes their financial statements for four years (two year before the merger and two year after the merger) by using six key accounting ratios. In spite of certain limitations, accounting ratios are still considered as a convenient and reliable analytical tool. The article concludes that merger deals fail to significantly improve the post-merger operating performance of financial institutions.Repositioning Vol.1(1) 2016: 11-22
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Ramakrishnan, K. "Long-term Post-merger Performance of Firms in India." Vikalpa: The Journal for Decision Makers 33, no. 2 (April 2008): 47–64. http://dx.doi.org/10.1177/0256090920080204.
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Mergers are important corporate strategy actions that, among other things, aid the firm in external growth and provide it competitive advantage. This area has spawned a vast amount of literature over the past half a century, especially in the developed economies of the world. India too has been seeing a growth in the number of mergers over the past one-and-a-half decades since economic liberalization and financial reforms were introduced in 1991. Studies on the post-merger long-term performance of firms in both the developed and the developing markets have not been able to come to a definite and convincing conclusion about whether mergers have helped or hindered firm performance. Our literature review shows that mergers do not appear to be resulting in favourable financial performance of firms in the long-term in the markets where they are a fairly recent phenomenon. The economic liberalization and reforms initiated in 1991 in India have served to trigger corporate restructuring through M&As. The removal of industrial licensing, lifting of monopoly provisions under the MRTP Act, easing of foreign investment, encouraging the import of raw materials, capital goods, and technology have increased the competition in Indian industry. Firms are free to fix their capacity, technology, location, etc., to enhance their efficiency. The amendment of the MRTPA has made it possible for group companies to consolidate through mergers eliminating duplication of resources and bringing down costs. M&A has now become a viable strategy for growth in India. Immediately after liberalization, Indian industry added capacity since it expected a rapidly expanding market due to the perceived latent demands of the vast middle class. But the lower income groups could not participate in the consumer goods market. The economy began to slow down from 1996. This squeezed the profit margins of local firms that now had excess capacities. Industry saw a spate of restructuring in the form of shedding non-core activities in favour of core competencies and expansion through M&As, in a bid for survival. According to market reformers, growth is the result of efficient utilization of resources on the supply side. In a free market economy, utilization becomes more efficient due to competition. It is thus hypothesized that -- Mergers in India have resulted in improved long-term post-merger firm operating performance through enhanced efficiency. Statistically analysed cash flow accounting measures were used to study whether firm performance improved in the long-term post-merger. This research, on a sample of 87 domestic mergers, validates the hypothesis: Efficiency appears to have improved post-merger lending synergistic benefits to the merged entities. Synergistic benefits appear to have accrued due to the transformation of the hitherto uncompetitive, fragmented nature of Indian firms before merger, into consolidated and operationally more viable business units. This improved operating cash flow return is on account of improvements in the post-merger operating margins of the firms, though not of the efficient utilization of the assets to generate higher sales.
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Lin, Chen, Micah S. Officer, and Beibei Shen. "Managerial Risk-Taking Incentives and Merger Decisions." Journal of Financial and Quantitative Analysis 53, no. 2 (February 26, 2018): 643–80. http://dx.doi.org/10.1017/s0022109017001260.
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We provide evidence concerning the effect of managerial risk-taking incentives on merger and acquisition (M&A) decisions and outcomes for different types of mergers: vertical, horizontal, and diversifying. Using chief executive officer (CEO) relative inside leverage to proxy for the incentives of risk-averse managers, we find that CEOs with higher inside leverage are more likely to engage in vertical mergers, and those mergers generate lower announcement returns for shareholders. This effect of CEO relative inside leverage on returns for shareholders in vertical acquisitions is more pronounced when the acquirer has a higher degree of informational opacity, weak governance, and excess cash.
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Haw, In-Mu, Victor Pastena, and Steven Lilien. "The Association between Market-Based Merger Premiums and Firms' Financial Position Prior to Merger." Journal of Accounting, Auditing & Finance 2, no. 1 (January 1987): 24–42. http://dx.doi.org/10.1177/0148558x8700200103.
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This paper tests the association between firms' prior financial performance and the magnitude and timing of merger premiums. The basic finding is that both financially healthy firms and financially troubled firms, as classified by the Altman Z score, earn merger premiums of 25%. However, the troubled firms experience market price increases earlier than healthy firms. Further analysis indicates that the early market price recovery of the troubled firms is consistent with the notion that tax loss carryforwards make acquisition attractive. In fact, the troubled firms with tax loss carryforwards experience merger premiums of 33.7% as opposed to 19.6% for troubled firms without tax loss carryforwards. These results indicate that the availability of the tax loss carryforwards may have facilitated mergers for troubled firms.
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Farooqi, Javeria, Thanh Ngo, and Surendranath Jory. "Real activities manipulation by bidders prior to mergers and acquisitions." Review of Accounting and Finance 16, no. 3 (August 14, 2017): 322–47. http://dx.doi.org/10.1108/raf-12-2014-0132.
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Purpose This study aims to examine the ability of investors to process signs of real activities manipulations at bidder firms in the quarters leading to the announcement of a merger. It further provides a supplementary explanation for the post-merger underperformance puzzle. Design/methodology/approach Examining a sample of cash-only, stock swap and mixed mergers completed between 1980 and 2011, it was found that bidder firms increase the use of real activities manipulation in the quarters leading up to the merger announcements. Using average abnormal stock return method, it is shown that the short-term positive effect of real activities manipulation on share prices is stronger than accrual-based earnings management. Findings While bidders are able to escape investors’ scrutiny in the short run, it is not the case in the long run. It was found that bidders’ long-run stock performance, measured by matched buy-and-hold stock returns, is inversely related to their pre-announcement level of earnings management. This paper contributes to the literature on earnings management by considering how real activities manipulations affect stock prices in mergers and acquisitions. Originality/value This study tests whether real activities manipulation, in addition to accrual-based earnings management, explains the underperformance puzzle of the acquiring firms in M&As. Zang (2012) argues that there is a greater likelihood for firms to engage in real activities manipulation, especially when firms are constrained in their use of accrual-based earnings management owing to heightened scrutiny or overuse in prior years.
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Flitter, Jordan, Julian B. Muñoz, and Ely D. Kovetz. "Outliers in the LIGO black hole mass function from coagulation in dense clusters." Monthly Notices of the Royal Astronomical Society 507, no. 1 (August 2, 2021): 743–60. http://dx.doi.org/10.1093/mnras/stab2203.
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ABSTRACT The advanced LIGO O3a run catalogue has been recently published, and it includes several events with unexpected mass properties, including mergers with individual masses in the lower and upper mass gaps, as well as mergers with unusually small mass ratios between the binary components. Here, we entertain the possibility that these outliers are the outcome of hierarchical mergers of black holes or neutron stars in the dense environments of globular clusters. We use the coagulation equation to study the evolution of the black hole mass function within a typical cluster. Our prescription allows us to monitor how various global quantities change with time, such as the total mass and number of compact objects in the cluster, its overall merger rate, and the probability to form intermediate-mass black holes via a runaway process. By accounting for the LIGO observational bias, we predict the merger event distributions with respect to various variables such as the individual masses M1 and M2, their ratio q, and redshift z, and we compare our predictions with the published O3a data. We study how these distributions depend on the merger-rate and ejections parameters and produce forecasts for the (tight) constraints that can be placed on our model parameters using the future data set of the O5 run. Finally, we also consider the presence of a static channel with no coagulation producing merger events alongside the dynamic channel, finding that the two can be distinguished based solely on the merger mass distribution with future O5 data.
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Jackson, R. A., G. Martin, S. Kaviraj, C. Laigle, J. E. G. Devriendt, Y. Dubois, and C. Pichon. "Why do extremely massive disc galaxies exist today?" Monthly Notices of the Royal Astronomical Society 494, no. 4 (April 10, 2020): 5568–75. http://dx.doi.org/10.1093/mnras/staa970.
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ABSTRACT Galaxy merger histories correlate strongly with stellar mass, largely regardless of morphology. Thus, at fixed stellar mass, spheroids and discs share similar assembly histories, both in terms of the frequency of mergers and the distribution of their mass ratios. Since mergers drive disc-to-spheroid morphological transformation, and the most massive galaxies typically have the richest merger histories, it is surprising that discs exist at all at the highest stellar masses (e.g. beyond the knee of the mass function). Using Horizon-AGN, a cosmological hydroynamical simulation, we show that extremely massive (M* > 1011.4 M⊙) discs are created via two channels. In the primary channel (accounting for 70${\rm {per\ cent}}$ of these systems and 8${\rm {per\ cent}}$ of massive galaxies), the most recent, significant (mass ratio > 1:10) merger between a massive spheroid and a gas-rich satellite ‘spins up’ the spheroid by creating a new rotational stellar component, leaving a massive disc as the remnant. In the secondary channel (accounting for 30 ${\rm {per\ cent}}$ of these systems and 3 ${\rm {per\ cent}}$ of massive galaxies), a system maintains a disc throughout its lifetime, due to an anomalously quiet merger history. Not unexpectedly, the fraction of massive discs increases towards higher redshift, due to the Universe being more gas-rich. The morphological mix of galaxies at the highest stellar masses is, therefore, a strong function of the gas fraction of the Universe. Finally, these massive discs have similar black hole masses and accretion rates to massive spheroids, providing a natural explanation for why some powerful AGN are surprisingly found in disc galaxies.
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Hassan, Mohamad, and Evangelos Giouvris. "Financial institutions mergers: a strategy choice of wealth maximisation and economic value." Journal of Financial Economic Policy 12, no. 4 (October 19, 2020): 495–529. http://dx.doi.org/10.1108/jfep-06-2019-0113.
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Purpose This study Investigates Shareholders' value adjustment in response to financial institutions (FIs) merger announcements in the immediate event window and in the extended event window. This study also investigates accounting measures performance, comparison of post-merger to pre-merger, including several cash flow measures and not just profitability measures, as the empirical literature review suggests. Finally, the authors examine FIs mergers orientations of diversification and focus create more value for shareholders (in the immediate announcement window and several months afterward) and/or generates better cash flows, profitability and less credit risk. Design/methodology/approach This study examines FIs merger effect on bidders’ shareholder’s value and on their observed performance. This examination deploys three techniques simultaneously: a) an event study analysis, to estimate and calculate abnormal returns (ARs) and cumulative abnormal returns (CARs) in the narrow windows of the merger announcement, b) buy and hold event study analysis, to estimate ARs in the wider window of the event, +50 to +230 days after the merger announcement and c) an observed performance analysis, of financial and capital efficiency measures before and after the merger announcement; return on equity, liquidity, cost to income ratio, capital to total assets ratio, net loans to total loans, credit risk, loans to deposits ratio, other expenses and total assets, economic value addition, weighted average cost of capital and return on invested capital. Deal criteria of value, mega-deals, strategic orientation (as in Ansoff (1980) growth strategies), acquiring bank size and payment method are set as individually as control variables. Findings Results show that FIs mergers destroy share value for the bidding firms pursuing a market penetration strategy. Market development and product development strategies enable shareholders’ value creation in short and long horizons. Diversification strategies do not influence bidding shareholders’ value. Local bank to bank mergers create shareholders’ value and enhance liquidity and economic value in the short run. Bank to bank cross border mergers create value for bidders’ in the long term but are associated with high costs and higher risks. Originality/value A significant advancement over the current literature is in assessing mergers, not only for bank bidders but also for the three pillars FIs of the financial sector; banks, real-estate companies and investment companies mergers. It is an improvement over current finance literature because it deploys two different strategies in the analysis. At a univariate level, shareholder value creation and market reaction to merger announcements are examined over short (−5 or +5 days) and long (+230 days) windows of the event. Followed by regressing, the resultant CARs and BHARs over financial performance variables at the multivariate level.
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Vomáčková, Hana. "Revaluation in Czech Financial Accounting and Legal Merger." Český finanční a účetní časopis 2009, no. 3 (October 1, 2009): 49–56. http://dx.doi.org/10.18267/j.cfuc.36.
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Pelák, Jiří. "Valuation Prospective of Merger Accounting of Deferred Tax." Český finanční a účetní časopis 2010, no. 4 (December 1, 2010): 101–7. http://dx.doi.org/10.18267/j.cfuc.91.
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Ferris, Stephen P., Narayanan Jayaraman, and Sanjiv Sabherwal. "CEO Overconfidence and International Merger and Acquisition Activity." Journal of Financial and Quantitative Analysis 48, no. 1 (February 2013): 137–64. http://dx.doi.org/10.1017/s0022109013000069.
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AbstractThis study examines the role that chief executive officer (CEO) overconfidence plays in an explanation of international mergers and acquisitions during the period 2000–2006. Using a sample of CEOs of Fortune Global 500 firms over our sample period, we find that CEO overconfidence is related to a number of critical aspects of international merger activity. Overconfidence helps to explain the number of offers made by a CEO, the frequencies of nondiversifying and diversifying acquisitions, and the use of cash to finance a merger deal. Although overconfidence is an international phenomenon, it is most extensively observed in individuals heading firms headquartered in Christian countries that encourage individualism while de-emphasizing long-term orientation in their national cultures.
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Cox, Raymond A. K. "Mergers and acquisitions: A review of the literature." Corporate Ownership and Control 3, no. 3 (2006): 55–59. http://dx.doi.org/10.22495/cocv3i3p13.
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This paper is a selected literature review of the theories and empirical evidence on mergers and acquisitions. Initially, the fundamental factors, and the underlying theories, causing mergers is explored. Subsequently, the empirical evidence is examined on: (1) the operating performance of the acquirers and the acquired firms before and after the merger, (2) stockholder wealth impact, (3) form of payment used to complete the acquisition, (4) conglomerate mergers, and (5) corporate governance affecting the firm’s ownership and control.
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Mudde, Paul A., and Parvez R. Sopariwala. "U.S. Airways merger: A strategic variance analysis of changes in post-merger performance." Journal of Accounting Education 32, no. 3 (September 2014): 305–22. http://dx.doi.org/10.1016/j.jaccedu.2014.04.004.
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Sanborn, Robert H. "The Regulatory History Of Business Combinations." Journal of Applied Business Research (JABR) 3, no. 2 (October 31, 2011): 101. http://dx.doi.org/10.19030/jabr.v3i2.6538.
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This paper examines the legal and accounting history of business combinations. The economic development of guidelines governing current combinations is traced through legislation, court precedents, political events, recording methods, and accounting pronouncements. This examination indicates that the consistently applied accounting principles have been the only unchanged environmental factor during the current round of business combinations. Although the accuracy of the accounting principles in describing economic events cannot be claimed as a harbinger of merger activity, the consistency of those rules would seem, at least, to be a stimulant to merger activity.
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Goet, Joginder. "Impact of merger on bank performance." Management Dynamics 23, no. 1 (March 10, 2021): 55–62. http://dx.doi.org/10.3126/md.v23i1.35560.
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In this study, accounting ratios has been used to analyze the financial performance of Citizens BankInternational Ltd. in Nepal before and after merger. I have analyzed their financial statements for sixyears by using various ratios. In spite of certain limitations, accounting ratios are still considered as aconvenient and reliable analytical tool. Ratio analysis, being a time-tested technique, is most frequentlyemployed in all financial decision-making processes. The results show that the financial performance ofCBI Ltd. in the areas of profitability and stability has been most satisfactory after merger. It means thatmerger deal success to improve the financial performance of the bank.
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Wulandari K, Andita, Zanuar Arifin, and Amrie Firmansyah. "Analysis of Business Combination Implementation at PT China Construction Bank Indonesia." JURNAL TERAPAN MANAJEMEN DAN BISNIS 4, no. 2 (September 1, 2018): 184. http://dx.doi.org/10.26737/jtmb.v4i2.933.
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<p>This study aims to review the implementation of mergers conducted by the company. In Indonesia, merger activities are regulated in Indonesia Statement of Financial Accounting Standards Number 22 (hereinafter referred to as PSAK 22) concerning Business Combinations. Increased merger activities in the business world are driven by changes in economic conditions. The rise of merger and acquisition activities was caused by various things, such as technological advances, increasing financial conditions, excess capacity/financial failure, international market consolidation and deregulation.</p><p>The research method used in this research is qualitative descriptive with case studies of business combination events that occurred between PT Bank Windu Kentjana Internasional, Tbk as the party which received the merger and PT Bank Antardaerah as the company which joined. Regarding ownership, the name of PT Bank Windu Kentjana Internasional, Tbk changed to PT China Construction Bank Indonesia, Tbk (PT CCB Indonesia, Tbk).</p>The results of this study indicate that in general, the consolidated report of PT CCB Indonesia, Tbk for the period ended December 31, 2016, in general, has been prepared by PSAK 22, 2015.
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Martin, G., R. A. Jackson, S. Kaviraj, H. Choi, J. E. G. Devriendt, Y. Dubois, T. Kimm, et al. "The role of mergers and interactions in driving the evolution of dwarf galaxies over cosmic time." Monthly Notices of the Royal Astronomical Society 500, no. 4 (November 7, 2020): 4937–57. http://dx.doi.org/10.1093/mnras/staa3443.
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ABSTRACT Dwarf galaxies (M⋆ < 109 M⊙) are key drivers of mass assembly in high-mass galaxies, but relatively little is understood about the assembly of dwarf galaxies themselves. Using the NewHorizon cosmological simulation (∼40 pc spatial resolution), we investigate how mergers and fly-bys drive the mass assembly and structural evolution of around 1000 field and group dwarfs up to z = 0.5. We find that, while dwarf galaxies often exhibit disturbed morphologies (5 and 20 per cent are disturbed at z = 1 and z = 3 respectively), only a small proportion of the morphological disturbances seen in dwarf galaxies are driven by mergers at any redshift (for 109 M⊙, mergers drive under 20 per cent morphological disturbances). They are instead primarily the result of interactions that do not end in a merger (e.g. fly-bys). Given the large fraction of apparently morphologically disturbed dwarf galaxies which are not, in fact, merging, this finding is particularly important to future studies identifying dwarf mergers and post-mergers morphologically at intermediate and high redshifts. Dwarfs typically undergo one major and one minor merger between z = 5 and z = 0.5, accounting for 10 per cent of their total stellar mass. Mergers can also drive moderate star formation enhancements at lower redshifts (3 or 4 times at z = 1), but this accounts for only a few per cent of stellar mass in the dwarf regime given their infrequency. Non-merger interactions drive significantly smaller star formation enhancements (around two times), but their preponderance relative to mergers means they account for around 10 per cent of stellar mass formed in the dwarf regime.
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Gill, Amarjit, Nahum Biger, Rajen Tibrewala, and Pradeep Prabhakar. "The impact of merger on working capital management efficiency of American production firms." Corporate Ownership and Control 13, no. 3 (2016): 100–109. http://dx.doi.org/10.22495/cocv13i3p9.
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The purpose of this study is to examine the impact of merger on the efficiency of working capital management of American production firms. This study applied a co-relational research design. A sample of 497 listed American production firms for a period of 4 years (from 2010-2014) was analyzed. The findings of this study indicate that mergers may contribute to an improvement of the efficiency of working capital management. This is a co-relational study that investigated the association between merger and working capital management efficiency. There is not necessarily a causal relationship between the two, although the paper provides some conjectures to such relationship. The findings of this study may only be generalized to firms similar to those that were included in this research. This study contributes to the literature on the factors that improve the efficiency of working capital management, and in particular on the association between merger and the efficiency of working capital management. The findings may be useful for financial managers, investors, financial management consultants, and other stakeholders.
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FAIRBURN, J. A. "British Merger Policy." Fiscal Studies 6, no. 1 (February 1985): 70–81. http://dx.doi.org/10.1111/j.1475-5890.1985.tb00401.x.
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