Are acquiring firms better off after an acquisition? Evidence from a knowledge-intensive industry in Greece

Abstract

This study examines the impact of mergers and acquisitions (M&As) on the post-merger operating performance of merger-involved firms in Greece at information technology industry, a knowledge-intensive industry. Using accounting data (financial ratios), the post-merger performance of all the Greek companies, listed on the Athens Stock Exchange at information technology industry, that executed one merger or acquisition in the period from 2004 to 2007 as acquirers (a sample of five firms), is investigated and the degree their successful knowledge transfer to the new merged firm is evaluated. For the purpose of the study, a set of eleven ratios is employed, in order to measure acquiring firms’ operating performance and to compare pre- and post-merger operating performance for two years before and after the M&A announcements. The results revealed that M&As had a negative impact on the post-merger performance of the mergerinvolved firms from a knowledge-intensive industry, concerning their total debt analysis, two years after the M&A transaction. Also there were not some other positive or negative impacts at any other examined ratio, which reveals a possible successful transfer of knowledge, but not the creation of potential synergies or cost reductions.