Do Mergers Improve Corporate Performance? Analysis of corporate activities based on joint RIETI/METI survey (Japanese)
AbstractThis paper analyzes changes in corporate performance pre-and post-merger, using a database of 1,590 corporate mergers (including unlisted companies), which took place between 1994 and 2002. The database was created using RECOF Corporation's M&A data and firm-level data from the Basic Survey of Japanese Business Structure and Activities of the Ministry of Economy, Trade and Industry. When measuring changes in the performance of companies immediately before and after mergers - which is done by dividing the samples into three categories: all industries, manufacturing, and non-manufacturing and controlling the performance of target companies using the Propensity Score Matching method-significant falls in indicators such as the total factor productivity (TFP) level, return on assets (ROA), the cash flow ratio, and the debt ratio become apparent, particularly in manufacturing. Meanwhile, when looking at changes in performance immediately after the merger and subsequently, to take into account integration costs at the time of the merger, we find that ROA and the cash flow ratio improve in both manufacturing and non-manufacturing but that the improvement occurs sooner in non-manufacturing. When analyzing changes in performance immediately after a merger, by type of merger, an improvement in TFP, ROA, and the cash flow ratio is quite evident in mergers between affiliated companies and mergers involving different industries in the case of manufacturing. These results suggest that the magnitudes of adjustment and transaction costs associated with mergers differ between manufacturing and non-manufacturing industries and between affiliated companies and companies in different industries. They can be interpreted as suggesting that mergers between different industries in manufacturing manifest synergies as a result of economies of scale, among other factors.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion Papers (Japanese) with number 09005.
Length: 35 pages
Date of creation: Apr 2009
Date of revision:
Contact details of provider:
Postal: 11th floor, Annex, Ministry of Economy, Trade and Industry (METI) 1-3-1, Kasumigaseki Chiyoda-ku, Tokyo, 100-8901
Web page: http://www.rieti.go.jp/
More information through EDIRC
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (NUKATANI Sorahiko).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.