Research Article
Analysis of the Effect of Mergers and Acquisitions on Financial Performance and Abnormal Return for The Public Companies
@INPROCEEDINGS{10.4108/eai.27-7-2021.2316828, author={Damar Nugroho and Rofikoh Rokhim}, title={Analysis of the Effect of Mergers and Acquisitions on Financial Performance and Abnormal Return for The Public Companies}, proceedings={Proceedings of the 4th International Conference on Economics, Business and Economic Education Science, ICE-BEES 2021, 27-28 July 2021, Semarang, Indonesia}, publisher={EAI}, proceedings_a={ICE-BEES}, year={2022}, month={3}, keywords={merger and acquisition abnormal return conglomerate m\&a}, doi={10.4108/eai.27-7-2021.2316828} }- Damar Nugroho
Rofikoh Rokhim
Year: 2022
Analysis of the Effect of Mergers and Acquisitions on Financial Performance and Abnormal Return for The Public Companies
ICE-BEES
EAI
DOI: 10.4108/eai.27-7-2021.2316828
Abstract
This study analyzes whether there are differences in financial performance and abnormal returns before with after mergers and acquisitions (M&A) were carried out. In this study, financial performance is proxied by financial that includes Current Ratio, TATO (Total Asset Turnover), DER (Debt to Equity Ratio), DAR (Debt to Asset Ratio), NPM (Net Profit Margin), ROE (Return on Equity), and ROA (Return on Asset). The financial ratios observation period is one year before and three years in a row after mergers and acquisitions. We study 123 M&A deals initiated by Indonesian public companies from 2006 to 2016 and compare the effects between three industrial group sectors, i.e. primary sectors, industry & manufacturing sectors, and non-financial service sectors. We further divide all sample enterprises into two different types of M&A, namely conglomerate M&A and non-conglomerate M&A. The statistical test used is the Paired Sample t-Test and Wilcoxon Signed Rank Test. This study shows that in primary sectors company, only TATO show significant differences in the comparison before and after M&A. In the other two sectors, there are no significant differences in all ratios. The study also shows that there is no consistent significant result in conglomerate and non-conglomerate M&A. This study also demonstrates that there is a significant difference in abnormal return on primary and industry & manufacturing group sectors but not on non-financial sectors.