Effects of Mergers and Acquisitions on the Financial Performance of Acquirer Banks: An Evidence-based Study from Pakistan

Ali Afraz and Mahreen Amjad

Audit and Accounting Review, 2021, vol. 1, issue 1, 61-81

Abstract: While facing the challenges of globalization and technological advancements, firms consistently aspire to gain a competitive edge over their adversaries. The objective of this study is to investigate whether mergers and acquisitions improve the financial performance of acquirer banks. For this purpose, data is collected from eleven banks listed on Pakistan Stock Exchange (PSX) that underwent the process of merger and acquisition between 2009 and 2012. The financial performance of these banks is analyzed with the assistance of financial ratios. Additionally, paired sample t-test is applied on the ratios to find out the statistics whether significant or not after the enhancement of the banks’ financial performance. Out of the six financial ratios, only three financial ratios showed significant change. Furthermore, two ratios improved, while one ratio deteriorated. The remaining three ratios were not statistically significant. Thus, this paper is useful for firms, financial organizations and banks since it provides information that would help them make informed financial decisions.

Keywords: acquisitions; assets quality; financial performance; leverage; liquidity; mergers; profitability (search for similar items in EconPapers)
Date: 2021
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