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Do mergers enhance financial performance? Empirical evidence from the Czech Republic

Author

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  • Podškubka Tomáš

    (Department of Corporate Finance and Business Valuation, Prague University of Economics and Business, Faculty of Finance and Accounting, Prague, Czech Republic)

  • Jahodová Lucie

    (Department of Corporate Finance and Business Valuation, Prague University of Economics and Business, Faculty of Finance and Accounting, Prague, Czech Republic)

  • Arlt Josef

    (Department of Corporate Finance and Business Valuation, Prague University of Economics and Business, Faculty of Finance and Accounting, W. Churchill Sq. 1938/4, 130 67 Prague, Czech Republic)

Abstract

This study investigates whether the post-merger performance of companies in the Czech Republic exceeds their pre-merger performance. Employing the Czech-specific IN05 model and internationally recognized composite financial performance indicators (Altman Z-score, Tafler model, and Kralicek Quick Test), the research utilizes a comprehensive dataset of 1,077 companies involved in mergers. The analysis spans a decade, covering five years before and after the mergers conducted in 2016. Results indicate that while the financial condition of merging companies shows stagnation, successor companies demonstrate statistically significant improvements in key financial indicators, especially during the period from 2017 to 2021. This highlights the positive impact of mergers on financial performance, even amid external disruptions such as the COVID-19 pandemic. These findings contribute to understanding M&A dynamics in medium-sized, open economies within the EU, offering valuable insights for both academic research and practical applications in corporate strategy.

Suggested Citation

  • Podškubka Tomáš & Jahodová Lucie & Arlt Josef, 2025. "Do mergers enhance financial performance? Empirical evidence from the Czech Republic," Financial Internet Quarterly (formerly e-Finanse), Sciendo, vol. 21(3), pages 10-27.
    • Handle: RePEc:vrs:finiqu:v:21:y:2025:i:3:p:10-27:n:1002
    DOI: 10.2478/fiqf-2025-0016
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    Keywords

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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