Using managerial and market tools to measure the impact of acquisition operations on firm performance

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This paper aims to investigate and evaluate the effect of pre- and post-mergers and acquisitions (M&A) on non-financial Egyptian firms’ performance using a balanced scorecard (BSC), as well as to empirically investigate the impact of M&A on shareholder wealth using cumulative abnormal returns (CAR). The paper is limited to non-financial firms listed on the Egyptian stock market (EGX) that have undergone acquisition operations during the time specified in the paper from 2003 to 2016. Four perspectives for the BSC are assessed before and after the acquisition operations to evaluate performance. The final sample for the BSC appraisal is 12 companies for 12 acquisition operations, while the sample for shareholders’ wealth consists of 10 companies. The difference in the sample is that some companies became out-of-counter after the M&A process. Cumulative differential analysis and graph observation show preferable values for post-acquisition operations versus pre-acquisition operations for the three non-financial perspectives, namely Customer satisfaction, Learning and growth, and Internal business process, and for two financial perspectives, namely Sales and Profitability. The results show preferable values for pre-acquisition operations for two financial perspectives: Liquidity and Market value. The T-test results failed to establish a relationship between M&A and enhancing BSC perspectives. The results could not find any evidence to support the impact of pre-post M&A on the shareholders’ wealth. The relationship between BSC before and after M&A and CAR is tested using a multiple regression model. The results show a significant relationship only between shareholder wealth and the Learning and growth perspective.

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    • Figure 1. Pre- and post-M&A financial perspective across the sample
    • Figure 2. Non-Financial perspective across the sample
    • Table 1. Balanced scorecard perspectives and their measures
    • Table 2. T-test analysis to differentiate between pre- and post-M&A results for the BSC model
    • Table 3. Differential analysis between CAR 120 days and CAR 60 days for M&A
    • Table 4. T-test for comparison between pre- and post-CAR 120 days and pre- and post-CAR 60 days
    • Table 5. Summary for results and their relation to literature
    • Table A1. Pre- and post-M&A BSC perspectives
    • Table B1. Differential analysis for post- and pre-M&A BSC perspectives
    • Table C1. Statistical analysis for BSC analysis
    • Table D1. Results for BSC and CAR pre-M&A
    • Table E1. Results for BSC and CAR post-M&A
    • Table F1. Testing the relationship between BSC perspectives and CAR 60&120 pre-M&A
    • Table G1. Testing the relationship between BSC perspectives and CAR 60&120 post-M&A
    • Conceptualization
      Zakia Abdelmoneim, Mostafa Abdelrahman Fekry
    • Data curation
      Zakia Abdelmoneim, Mostafa Abdelrahman Fekry
    • Formal Analysis
      Zakia Abdelmoneim, Mostafa Abdelrahman Fekry
    • Investigation
      Zakia Abdelmoneim, Mostafa Abdelrahman Fekry
    • Methodology
      Zakia Abdelmoneim, Mostafa Abdelrahman Fekry
    • Project administration
      Zakia Abdelmoneim, Mostafa Abdelrahman Fekry
    • Supervision
      Zakia Abdelmoneim, Mostafa Abdelrahman Fekry
    • Validation
      Zakia Abdelmoneim, Mostafa Abdelrahman Fekry
    • Visualization
      Zakia Abdelmoneim, Mostafa Abdelrahman Fekry
    • Writing – original draft
      Zakia Abdelmoneim, Mostafa Abdelrahman Fekry
    • Writing – review & editing
      Zakia Abdelmoneim, Mostafa Abdelrahman Fekry