AN EMPIRICAL ANALYSIS OF PRE AND POST MERGER OR ACQUISITION IMPACT ON FINANCIAL PERFORMANCE: A CASE STUDY OF PAKISTAN TELECOMMUNICATION LIMITED (Published)
The research of this study is to define the objectivity of merger and acquisition impact in pre and post scenario of the event. The study has played with two parts, the first part of the study implement regression model with the help of accounting ratios of profitability and long term financial position ratios with score of bankruptcy. The second part of the study just analyzes the pre and post financial ratios and its trend over the period of time. The time period taken for the selected company PTCL is from 2003 to 2009, which covers the event. The results of first part of the study has shown that profitability and long term financial position of the company is producing a strong positive impact on the firm score of bankruptcy. The second part of financial ratio has seen that after acquisition the profitability of has declined significantly and it has affected the score of the bankruptcy i.e. Z-Score. The overall long term financial position is neither improved nor declined. It has shown a constant trend over the period of time in which the data is taken. It has been conclude that performance of PTCL has not improved over the period of time
Keywords: Acquisition, Bankruptcy, Long Term Financial Position, Merger, PTCL, Profitability, Regression, Z Score
THE EFFECT OF MERGER ON DEPOSIT MONEY BANKS PERFORMANCE IN THE NIGERIAN BANKING INDUSTRY (Published)
The study objective gives an insight into the effectiveness of economic policy reforms in the Nigerian banking industry. This study examines the impacts of merger on deposit money banks performance in Nigeria between 2000 and 2009. The period was characterized by financial deregulation, the Global economic crisis, and bank restructuring programs. The panel data ordinary least squares approach is the methodology employed to investigate if there is any significant effect on the performance of banks from the pre to the post merger periods, in order to detect whether bank mergers produce any performance gains in the Nigerian banking industry. The evidence shows that merger created synergy as indicated by the statistically significant increasing post-merger financial performances although banks should not jump at any merging opportunity that offers itself because the exercise is not an opportunistic one. We therefore recommend that merger being a relatively new phenomenon in the Nigerian banking environment should be given more encouragement by the regulatory authorities.
Keywords: Deposit Money Banks, Merger, Performance
Post Merger And Acquisition And Performance Of Deposit Money Banks In Nigeria (Review Completed - Accepted)
Mergers and acquisitions as a phenomenon is implemented to strengthen the banking system, embrace globalization, improve healthy competition, exploit economies of scale, adopt advanced technologies, raise efficiency and improve profitability. The world globalization has led to world financial crisis which has significantly affected the banking industry and has consequently increased the need for mergers and acquisitions (M&A) in the consolidation of deposit money banks. One of the major policies introduced to solve these financial problems is by consolidation through mergers and acquisitions. This study explored the impact of post mergers and acquisitions on the performance of deposit money banks in Nigeria. The study adopted a cross sectional survey design with a total population of 22 deposit money banks in Nigeria. A sample of 10 banks was randomly selected from the above population. The study used the secondary sources to extract data from the Annual Reports of the selected banks for a period of five (5) years (2008-2012). Simple regression analysis technique was used for data analyses. The study revealed that as at the end of year 2012, the average capital base of the sampled banks in the post Merger period showed a total of (N 1.76 Trillion). This is an improvement from the recent work of Oghojafor (2012) in which average capital base stood at (N 6,358.76 Million). The study revealed an insignificant but positive relationship between post mergers and acquisitions capital base (PMACB) and dividend per share (DPS) with (P=0.985 i.e. P>0.05), earnings per share (EPS) with (P=0.803 i.e. P>0.05), return on assets (ROA) with (P=0.859 i.e. P>0.05) and return on capital employed with (P=0.666 i.e. P>0.05). This study concluded that post merger and acquisition has no significant effect on dividend per share of shareholders, their earnings per share, return on assets and return on capital employed. In a broad perspective, this study further revealed that there is a reduction in the degree of global banking crisis over the years and thus reduction in the general banking failure particularly in Nigeria. This is made possible through mergers and acquisition process which consecutively resulted in increased capital base of banking industry in Nigeria. The study recommended that equal considerations should be given to both micro and macro prudential guidelines, in order to ensure sound and stable banking system. Also, deposit money banks should incorporate into their banking policy other factors such as credit discipline, corporate culture, and management information system so as to ensure increase in their earnings ability.
Keywords: Acquisition, Banking Sector, Merger, Performance