The characteristics of mergers and acquisitions and their impact on performance in emerging countries: A Saudi Arabian study

Sara Khotbi () and Patrick Rousseau ()
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Sara Khotbi: CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon
Patrick Rousseau: CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon

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Abstract: Mergers and acquisitions are attracting interest from financial researchers who are trying to determine the performance of these high-risk operations. It is not easy to identify variables that precisely map into the various factors that affect value creation through cross border mergers and acquisitions nor to pick an appropriate performance indicator because the definitions of performance vary in terms of accounting, financial and operational views. In this paper, we focused on the impact of the characteristics of the transaction on the corporate financial performance of mergers and acquisitions, which are return on investment, return on equity and Marris ratio, using data on the deals that occurred during the period 2010-2015 in Saudi Arabia. Panel data and precisely random effect method are applied to carry out empirical analysis. In this paper, we examine whether specific merger characteristics impact the M&A's performance. The results show that the performance is negatively influenced by the level of indebtedness for the 3 performance indicators and by the sectorial proximity for the return on equity. The cash level has a very slight positive impact on the 3 indicators. Concerning the other explanatory factors, they do not have a significant effect on performance for the acquiring firms.

Keywords: Emerging economies; Mergers and acquisitions; Operation characteristics; Performance measures (search for similar items in EconPapers)
Date: 2018-11-23
New Economics Papers: this item is included in nep-ara and nep-cfn
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