An empirical model of measuring economic effects of mergers

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Year of publication 2013
Type Article in Periodical
Magazine / Source Wulfenia Journal
MU Faculty or unit

Faculty of Economics and Administration

Field Management and administrative
Keywords company transformations; mergers and acquisitions; macroeconomic environment; economic effects; earnings after tax; measuring; equity; statistical analysis; return on equity;
Description Out of the many possible methods suitable for measuring efficiency, we selected a financial analysis based on ratio indicators. The method uses empirical data extracted from the Trade Register for the period 2001–2011. The structure of the data allows us to analyse economic effects of mergers and indicate possible causes of their (in)efficiency. We chose variables earnings after tax and equity out of the possible economic characteristics of merger efficiency. Statistical testing of hypotheses did not confirm a positive effect of mergers on the development of either of the variables. To ascertain the real economic contribution of the mergers for owners, we chose the indicator return on equity and monitored its change before and after a merger. The created model enables to select any sets of parallel indicators suitable for a complex analysis of economic effects of mergers.
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