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

Journal of Management Control. 2015. Vol. 26. No. 4. P. 377–403.

Grigorieva S., Petrunina T.

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 preacquisition performance measures. The difference is equal to a significant −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).

Keywords: слияния и поглощения, value creation, создание стоимости, mergers and acquisitions, emerging capital markets, company performance, эффективность деятельности компании, развивающиеся рынки капитала, economic profit, экономическая прибыль

Publication based on the results of: Empirical Analysis of Corporate Financial Decisions of Companies of Emerging Capital Markets under the Pressure of Global Markets Transformation and Knowledge Economy Development (2015)