The performance of mergers and acquisitions in emerging capital markets: new angle

Svetlana Grigorieva () and Tatiana Petrunina ()

Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, 2015, vol. 26, issue 4, 377-403

Abstract: Researchers have long tried to define the impact of corporate mergers and acquisitions on company performance. We contribute to the existing literature by examining the performance of M&A deals in emerging capital markets based on the economic profit model and comparing the results with ones obtained by means of traditional method—accounting studies. Examining a sample of 80 deals initiated by companies from emerging capital markets over 2003–2009, we find that M&As are value-destroying deals for the combined firms. Results from the long-run analysis prove the negative industry-adjusted differences between post-acquisition and pre-acquisition performance measures. The difference is equal to a significant $$-3.3$$ - 3.3 % for the EBITDA/sales ratio. The economic profit approach demonstrates a similar result. Economic profit has declined due to M&A deals by $4 million. We also analyze the determinants of M&A performance, such as method of payment, business similarity, and type of geographical expansion (cross-border versus local deals). Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: Mergers and acquisitions; Value creation; Economic profit; Company performance; Emerging capital markets; G34 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (11)

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DOI: 10.1007/s00187-015-0219-9

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