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Impact of Merger and Acquisition on the Profitability of Medium Sized Technology Companies Listed on New York Stock Exchange

Author

Listed:
  • Simon RAFAQAT
  • Sahil RAFAQAT
  • Saoul RAFAQAT
  • Dawood RAFAQAT

Abstract

Objective: The purpose of the study is to identify the influence of merger and acquisition on the technology companies’ profitability.Method: Therefore, the five medium-sized technology companies, listed on New York Stock Exchange, and profitability ratios, including return on assets, return on equity, and earnings per share, have been selected. The Independent sample T-test is used for this study. The financial data that has been gathered from the U.S. Securities and Exchange Commission, companies’ annual reports, and NASDAQ website over the period from 2003 to 2020.Results: The results indicate that the earnings per share ratio increased while both returns on assets and return on equity ratios deteriorated. However, the earnings per share ratio significantly improved and the return on equity significantly declined while there was no significant impact on return on assets. The study concludes that the overall profitability decreased whereas the earnings per share faced a significant rise and return on equity ratios was found to be decreased significantly.Originality / Relevance: This study is one of the few studies which have evaluated the effect of the merger and acquisition on the profitability of medium-sized technology companies listed on New York Stock Exchange, over the period from 2003 to 2020.Theoretical/methodological contributions: The paper contributes to the existing literature on merger and acquisition by providing empirical evidence of the impact of merger and acquisition on profitability.Social/management contributions: This study will help technology investors and investment management companies to make investment decisions, and can also be helpful for the acquirer companies to handle the consequences of the merger on profitability.

Suggested Citation

  • Simon RAFAQAT & Sahil RAFAQAT & Saoul RAFAQAT & Dawood RAFAQAT, 2021. "Impact of Merger and Acquisition on the Profitability of Medium Sized Technology Companies Listed on New York Stock Exchange," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 12(2), pages 124-139, December.
    • Handle: RePEc:jaf:journl:v:12:y:2021:i:2:n:365
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    References listed on IDEAS

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    1. Abdul Rashid & Nazia Naeem, 2017. "Effects of mergers on corporate performance: An empirical evaluation using OLS and the empirical Bayesian methods," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 17(1), pages 10-24, March.
    2. HaiYue Liu & YiXian Li & Rui Yang & XiaoPing Li, 2021. "How Do Chinese Firms Perform Before and After Cross-Border Mergers and Acquisitions?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(2), pages 348-364, January.
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    More about this item

    Keywords

    Profitability; return on assets; return on equity; earnings per share; Technology companies; New York Stock Exchange; Merger and acquisition;
    All these keywords.

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • N8 - Economic History - - Micro-Business History
    • G3 - Financial Economics - - Corporate Finance and Governance

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