en pl
en pl

Central European Management Journal

Show issue
Year 12/2020 
Volume 28 
Issue 4

Determinants of Companies’ Financial Performance Following M&A Transactions in Poland

Marcin Ocieszak
Kozminski University

12/2020 28 (4) Central European Management Journal

DOI 10.7206/cemj.2658-0845.34

Abstract

Purpose: This study identifies and analyzes the factors that impact the financial performance of companies after a merger and acquisition transaction.
Methodology: As many as 130 Polish market observations were analyzed with an OLS regression model to verify the research hypotheses.
Results: The results reveal that the company’s size, performance before the transaction, and its international nature translated into improvement of post-transaction financial performance. Moreover, industry diversification transactions and CEO changes in acquiring a company had a negative impact on the company’s financial performance after the transaction.
Originality: This investigation is the first study devoted to the Polish market in the research field of M&A determinants with the use of such a large sample.

References

  1. Al-Hroot, Y.A. (2016). The impact of mergers on financial performance of the Jordanian industrial sector. International Journal of Management & Business Studies, 6(01), 2230–9519. [Google Scholar]
  2. Almeida, L. (2016). How to measure corporate control? Evidence from panel threshold effects of the degree of control on CEO pay monitoring, efmaefm.org. [Google Scholar]
  3. Bertrand, O., and Betschinger, M.A. (2012). Performance of domestic and cross-border acquisitions: Empirical evidence from Russian acquirers. Journal of Comparative Economics, 40(3), 413-437. https://doi.org/10.1016/j.jce.2011.11.003 [Google Scholar]
  4. Braguinsky, S., Mityakov, S., and Liscovich, A. (2014). Direct estimation of hidden earnings: Evidence from Russian administrative data. Journal of Law and Economics, 57(2), 281–319. https://doi.org/10.1086/675943 [Google Scholar]
  5. Byrka-Kita K., and Czerwiński, M. (2013). Premia z tytułu kontroli na polskim rynku kapitałowym. Ekonomista, 1/2013, 127–154. [Google Scholar]
  6. Cui, H., and Leung, S.C.M. (2020). The long-run performance of acquiring firms in mergers and acquisitions: Does managerial ability matter?. Journal of Contemporary Accounting & Economics, 16(1), 100185. https://doi.org/10.1016/j.jcae.2020.100185. [Google Scholar]
  7. Drees, M.J. (2014). (Dis)Aggregating alliance, joint venture, and merger and acquisition performance: A meta-analysis. Advances in Mergers and Acquisitions, 13, 1–24. https://doi.org/10.1108/S1479-361X20140000013001. [Google Scholar]
  8. Fama, E.F., and Jensen, M.C. (1983). Separation of ownership and control. The Journal of Law and Economics, 26(2), 301–325. https://doi.org/10.1086/467037. [Google Scholar]
  9. Faulkner, D., Pitkethly, R., and Child J. (2002). International mergers and acquisitions in the UK 1985-94: a comparison of national HRM practices. The International Journal of Human Resource Management. https://doi.org/10.1080/09585190110092839 [Google Scholar]
  10. Ferreira M.P., Santos J.C., Almeida, M.I.R., and Reis, N.R. (2014). Mergers & acquisitions research: A bibliometric study of top strategy and international business journals, 1980–2010. Journal of Business Research, 67(12), 2550–2558. https://doi.org/10.1016/j.jbusres.2014.03.015. [Google Scholar]
  11. Fich, E.M., Officer, M.S., and Tran, A.L. (2016). Do acquirers benefit from retaining target CEOs?. Available at SSRN 2729881. https://doi.org/10.2139/ssrn.2729881. [Google Scholar]
  12. Frederiksen, A., and Kato, T. (2018). Human capital and career success: evidence from linked employer‐employee data. The Economic Journal, 128(613), 1952–1982. https://doi.org/10.1111/ecoj.12504. [Google Scholar]
  13. Fukao, K., Ito, K., Kwon, H.U., and Takizawa, M. (2008). Cross-border acquisitions and target firms' performance: Evidence from Japanese firm-level data. In: International financial issues in the Pacific Rim: Global imbalances, financial liberalization, and exchange rate policy (pp. 347–389). University of Chicago Press. https://doi.org/10.7208/chicago/9780226387086.003.0012. [Google Scholar]
  14. Ghosh, A. (2001). Does operating performance really improve following corporate acquisitions? Journal of Corporate Finance, 7.2, 151–178. https://doi.org/10.1016/S0929-1199(01)00018-9. [Google Scholar]
  15. Haleblian, J., Devers, C.E., McNamara, G., Carpenter, M.A., and Davison, R.B. (2009). Taking stock of what we know about mergers and acquisitions: A review and research agenda. Journal of Management, 35(3), 469–502. https://doi.org/10.1177/0149206308330554. [Google Scholar]
  16. Heron, R., and Lie, E., (2002). Operating performance and the Method of Payment in Takeovers. The Journal of Financial and Quantitative Analysis, 37(1), 137–155. https://doi.org/10.2307/3594998. [Google Scholar]
  17. Healy P.M., Palepu K.G., and Ruback, R.S. (1992), Does corporate performance improve after mergers? Journal of Financial Economics, 31.2, 135–175. https://doi.org/10.1016/0304-405X(92)90002-F. [Google Scholar]
  18. Kalinowska, A., and Mielcarz, P. (2014). Methods of payment in M&A transactions and the operational performance of acquirers. Available at SSRN 2419742. https://doi.org/10.2139/ssrn.2419742. [Google Scholar]
  19. Kruse T.A., Park H.Y., Park K., and Suzuki K., (2007). Long-term performance following mergers of Japanese companies: the effect of diversification and affiliation. Pacific-Basin Financial Journal, 15, 154–172. https://doi.org/10.1016/j.pacfin.2006.07.001. [Google Scholar]
  20. Linn, S.C., and Switzer, J.A (2001). Are cash acquisitions associated with better postcombination operating performance than stock acquisitions?. Journal of Banking & Finance, 25.6, 1113–1138, https://doi.org/10.1016/S0378-4266(00)00108-4. [Google Scholar]
  21. Ma, X., and Xu, W. (2017). CEO Turnover after Acquisitions: Are Self-interested Bidders Fired?. In 3rd International Symposium on Social Science. Atlantis Press. https://doi.org/10.2991/isss-17.2017.86. [Google Scholar]
  22. Manne, H.G. (1965). Mergers and the Market for Corporate Control. Journal of Political Economy, 75, 110–120. https://doi.org/10.1086/259000. [Google Scholar]
  23. Marin, D., Rousova, L., and Verdier, T. (2016). Do Multinationals Transplant their Business Model?, papers.ssrn [Google Scholar]
  24. Martynova, M., and Renneboog, L. (2006). Mergers and acquisitions in Europe. Advances in Corporate Finance and Asset Pricing, 13–75. https://doi.org/10.1016/B978-044452723-3/50004-8. [Google Scholar]
  25. Masulis, R.W., Wang, C., and Xie, F. (2007). Corporate governance and acquirer returns. The Journal of Finance. https://doi.org/10.1111/j.1540-6261.2007.01259.x. [Google Scholar]
  26. Mielcarz, P., Osiichuk, D., and Behr, A. (2018). The influence of capital expenditures on working capital management in the corporate sector of an emerging economy: the role of financing constraints. Economic Research-Ekonomska Istraživanja, 31(1), 946–966. https://doi.org/10.1080/1331677X.2018.1436450. [Google Scholar]
  27. Mielcarz, P., and Wnuczak, P. (2011). DCF Fair Value Valuation, Excessive Assetes and Hidden Inefficiencies. Contemporary Economics, 5(4), 44–57. https://doi.org/10.5709/ce.1897-9254.27. [Google Scholar]
  28. Moeller, S., and Schlingemann, F. (2004). Are cross-border acquisitions different from domestic Acquisitions? Evidence on stock and operating performance for US acquirers. Journal of Banking and Finance, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=311543. [Google Scholar]
  29. Moeller, S.B., Schlingemann, F.P., and Stulz, R.M. (2005). Wealth Destruction on a Massive Scale? A Study of Acquiring‐Firm Returns in the Recent Merger Wave. Journal of Finance, March. https://doi.org/10.3386/w10200. [Google Scholar]
  30. Ocieszak, M. (2014). Procesy konsolidacyjne w Polsce, ich determinanty i zwiazki z tendencjami światowymi, Zeszyty Naukowe Uniwersytetu Szczecińskiego, 803, Finanse, Rynki Finansowe, Ubezpieczenia, 66. [Google Scholar]
  31. Ocieszak, M. (2015). Skutki finansowe fuzji i przejęć w Polsce w latach 2003–2009 oceniane na podstawie danych księgowych. Zeszyty Naukowe Uniwersytetu Szczecińskiego. Finanse, Rynki Finansowe, Ubezpieczenia, 73, 559–569. [Google Scholar]
  32. Pangarkar, N., and Lim, H. (2003). Performance of foreign direct investment from Singapore. International Bussines Review, 12, 601–624. [Google Scholar]
  33. Powell R.G., Stark A.W., (2005), Does operating performance increase post-takeover for UK takeovers? A comparison of performance measures and benchmarks. Journal of Corporate Finance, 11.1, 293–317. https://doi.org/10.1016/j.jcorpfin.2003.06.001. [Google Scholar]
  34. Perepeczo, A. (2009). Fuzje i przejęcia-efektywność finansowa: wyniki badań zagranicznych i krajowych. Rozprawy i Studia/Uniwersytet Szczeciński, 746. [Google Scholar]
  35. Rahman, R.A. and Limmack, R.J. (2004). Corporate acquisitions and the operating performance of Malaysian companies. Journal of Business Finance & Accounting, 31.3‐4, 359–400. https://doi.org/10.1111/j.0306-686X.2004.00543.x. [Google Scholar]
  36. Rao-Nicholson, R., Salaber, J., and Cao, T.H. (2016). Long-term performance of mergers and acquisitions in ASEAN countries. Research in International Business and Finance, 36, 373–387. https://doi.org/10.1016/j.ribaf.2015.09.024. [Google Scholar]
  37. Shin, H-H., and Stulz, R.M. (1998). Are internal capital markets efficient? Quarterly Journal of Economics, 531–552. https://doi.org/10.1162/003355398555676. [Google Scholar]
  38. Shleifer A., and Vishny, R.W. (1989), Management entrenchment: The case of manager-specific investments. Journal of Financial Economics, 25.1, 123–139. https://doi.org/10.1016/0304-405X(89)90099-8. [Google Scholar]
  39. Shams, S.M., and Gunasekarage, A. (2016). Operating performance following corporate acquisitions: Does the organisational form of the target matter? Journal of Contemporary Accounting & Economics, 12(1), 1–14. https://doi.org/10.1016/j.jcae.2016.02.001. [Google Scholar]
  40. Sharma, D.S., and Ho J. (2002), The impact of acquisitions on operating performance: Some Australian evidence. Journal of Business Finance & Accounting, 29, 1–2, 155–200. https://doi.org/10.1111/1468-5957.00428. [Google Scholar]
  41. Switzer, J.A (1996). Evidence on real gains in corporate acquisitions. Journal of Economics and Business, 5, 443–460. https://doi.org/10.1016/S0148-6195(96)00033-1. [Google Scholar]
  42. Wang, L., and Murnighan, J.K. (2013). The generalist bias. Organizational Behavior and Human Decision Processes, 120(1), 47–61. https://doi.org/10.1016/j.obhdp.2012.09.001. [Google Scholar]
  43. De Wet, J.H.V.H., and Du Toit, E. (2007). Return on equity: A popular, but flawed measure of corporate financial performance. South African Journal of Business Management, 38(1), 59–69. https://doi.org/10.4102/sajbm.v38i1.578. [Google Scholar]
  44. Wangerin, D. (2019). M&A due diligence, post‐acquisition performance, and financial reporting for business combinations. Contemporary Accounting Research, 36(4), 2344–2378. https://doi.org/10.1111/1911-3846.12520. [Google Scholar]
  45. Vennet, R.V. (1996). The effect of mergers and acquisitions on the efficiency and profitability of EC credit institutions. Journal of Banking and Finance. https://doi.org/10.1016/S0378-4266(96)00014-3. [Google Scholar]
  46. Yaghoubi, R., Yaghoubi, M., Locke, S., and Gibb, J. (2016). Mergers and acquisitions: a review. Part 1. Studies in Economics and Finance. https://doi.org/10.1108/SEF-03-2015-0078 [Google Scholar]

Full metadata record

Cite this record

APA style

Ocieszak, Marcin (2020). Determinants of Companies’ Financial Performance Following M&A Transactions in Poland. (2020). Determinants of Companies’ Financial Performance Following M&A Transactions in Poland. Central European Management Journal, 28(4), 51-66. https://doi.org/10.7206/cemj.2658-0845.34 (Original work published 12/2020AD)

MLA style

Ocieszak, Marcin. “Determinants Of Companies’ Financial Performance Following M&a Transactions In Poland”. 12/2020AD. Central European Management Journal, vol. 28, no. 4, 2020, pp. 51-66.

Chicago style

Ocieszak, Marcin. “Determinants Of Companies’ Financial Performance Following M&a Transactions In Poland”. Central European Management Journal, Central European Management Journal, 28, no. 4 (2020): 51-66. doi:10.7206/cemj.2658-0845.34.