Determinants of Operating Performance Changes after M&A Deals

The problem of operating performance change after a corporate merger or acquisition has been discussed by many authors. Unfortunately, there is no clear understanding of whether the operating performance improve after a corporate takeover. With ample of proposed operating performance measures and benchmarks for adjustments as well as methodologies the researchers report different results.  This study applies the accounting-based approach of estimating the company’s operating performance measure. For different operating performance measures are applied to find the consistent evidences of operating performance change determinants after takeovers.  The estimation results show that there is no consistent evidence that takeover which is paid by cash outperform other deals as well as there is no consistent evidence of that relatively large target involved deals outperform relatively small target involved deals. Estimation shows that outperforming of cross-border deals is statistically significant. The author reports that deals closed in a non-crisis period are associated with a greater operating performance improvements after takeovers.