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Journal of Management Control

, Volume 26, Issue 4, pp 377–403 | Cite as

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

  • Svetlana GrigorievaEmail author
  • Tatiana Petrunina
Original Paper

Abstract

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 pre-acquisition 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

Mergers and acquisitions Value creation Economic profit Company performance Emerging capital markets 

JEL Classification

G34 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2015

Authors and Affiliations

  1. 1.Department of FinanceNational Research University Higher School of EconomicsMoscowRussia
  2. 2.Corporate Finance CenterNational Research University Higher School of EconomicsMoscowRussia

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