Mergers, acquisitions and economic performance of Greek firms: An accounting perspective

Abstract

This study examines the impact of mergers and acquisitions (M&As) on the economic performance of merger-involved firms in Greece. Using financial ratios, the post-merger performance of a sample of forty Greek companies, listed on the Athens Stock Exchange that executed at least one merger or acquisition in the period from 2003 to 2005 as acquirers, is investigated. For the purpose of the study, we employ a set of four profitability ratios (ROE and ROA, before and after taxes, respectively), in order to measure firms’ economic performance and to compare pre- and post-merger economic performance for one and two years before and after M&A announcements. The results revealed that none of all the examined profitability ratios did not change significantly due to the M&A event. The final conclusion that conducted is that M&As have not had any impact on economic performance of merger-involved firms and they were finally investment actions of zero value.

JEL Classifications: G34, M40.