IDEAS home Printed from https://ideas.repec.org/a/bjc/journl/v7y2020i5p141-152.html
   My bibliography  Save this article

Mergers and Acquisition Strategy and Performance of Selected Deposit Money Banks in Nigeria

Author

Listed:
  • Etim Osim Etim

    (BSc, MBA, MSc, PhD, CFAN, FCA, Department of Accounting, Faculty of Business Administration, University Of Uyo, Uyo, Akwa Ibom State, Nigeria)

  • Nsima Johnson Umoffong

    (BSc, MBA, PhD, Department of Accounting, Faculty of Business Administration, University Of Uyo, Uyo, Akwa Ibom State, Nigeria)

Abstract

The study examined the effect of merger and acquisition strategy on performance of selected Deposit Money Banks (DMBs) in Nigeria. Purposive sampling technique was adopted as sampling procedure for selecting three Deposit Money Banks (UBA, Access Bank and FCMB) that successfully implemented Merger and Acquisition Strategy in the Financial Services Sector of the Nigeria economy. Secondary Data Spanning a period of 20 years (1996-2015) were collected from the published annual financials of the banks. Descriptive statistics involving the test of differences in two means (pre and post mergers periods) and multivariate Analysis of variance (MANOVA) were employed in analysis of the data. Results shows that merger and acquisition strategy impacted positively on performance of the selected Deposit money Banks in Nigeria with improved performance in gross earnings (pre total value 6.05, post total value , 405.29); profit after tax (PAT) values (Pre-total values 2.1 post total values 65.91). Earnings Per Share (E.P.S) values (pre-total values 23.03, Post-total values, 141.12). More so the calculated ANOVA values (F-statistic) for test of hypothesis were 32.83, 17.31 and 29.14 as against 3.60 critical value meaning post-merger performance were better than the pre-merger period. It was concluded that merger and acquisition strategy is good for Nigerian Banks. It is recommended that Banks with poor corporate governance issues and weak Capital structure should embrace mergers and acquisition and that the CBN should strengthen it monitoring and oversight functions to enhance operational efficiency of Deposit money Banks in Nigeria.

Suggested Citation

  • Etim Osim Etim & Nsima Johnson Umoffong, 2020. "Mergers and Acquisition Strategy and Performance of Selected Deposit Money Banks in Nigeria," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 7(5), pages 141-152, May.
    • Handle: RePEc:bjc:journl:v:7:y:2020:i:5:p:141-152
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijrsi/digital-library/volume-7-issue-5/141-152.pdf
    Download Restriction: no
    File URL: https://www.rsisinternational.org/virtual-library/papers/mergers-and-acquisition-strategy-and-performance-of-selected-deposit-money-banks-in-nigeria/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rufus Ayodeji Olowe, 2011. "The impact of the 2004 bank capital announcement on the Nigerian stock market," African Journal of Economic and Management Studies, Emerald Group Publishing Limited, vol. 2(2), pages 180-201, September.
    2. Denis, Diane K. & McConnell, John J., 2003. "International Corporate Governance," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(1), pages 1-36, March.
    3. Deep, Akash & Schaefer, Guido, 2004. "Are Banks Liquidity Transformers?," Working Paper Series rwp04-022, Harvard University, John F. Kennedy School of Government.
    4. Ghosh, Aloke, 2001. "Does operating performance really improve following corporate acquisitions?," Journal of Corporate Finance, Elsevier, vol. 7(2), pages 151-178, June.
    5. Lex Donaldson, 2008. "Ethics Problems and Problems with Ethics: Toward a Pro-Management Theory," Journal of Business Ethics, Springer, vol. 78(3), pages 299-311, March.
    6. Rufus Ayodeji Olowe, 2011. "The impact of the 2004 bank capital announcement on the Nigerian stock market," African Journal of Economic and Management Studies, Emerald Group Publishing Limited, vol. 2(2), pages 180-201, September.
    7. Lois M. Shelton, 1988. "Strategic business fits and corporate acquisition: Empirical evidence," Strategic Management Journal, Wiley Blackwell, vol. 9(3), pages 279-287, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marc Goergen, 2005. "Corporate Governance Convergence: Evidence From Takeover Regulation Reforms in Europe," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 21(2), pages 243-268, Summer.
    2. Thenmozhi, M. & Narayanan, P.C., 2016. "Rule of law or country level corporate governance: What matters more in emerging market acquisitions?," Research in International Business and Finance, Elsevier, vol. 37(C), pages 448-463.
    3. Tanveer Hussain & Abongeh A. Tunyi & Jacob Agyemang, 2024. "Corporate governance transfers: the case of mergers and acquisitions," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 21(4), pages 543-567, December.
    4. Yen, Tze-Yu & Andre, Paul, 2007. "Ownership structure and operating performance of acquiring firms: The case of English-origin countries," Journal of Economics and Business, Elsevier, vol. 59(5), pages 380-405.
    5. Rao-Nicholson, Rekha & Salaber, Julie & Cao, Tuan Hiep, 2016. "Long-term performance of mergers and acquisitions in ASEAN countries," Research in International Business and Finance, Elsevier, vol. 36(C), pages 373-387.
    6. Martynova, M., 2006. "The market for corporate control and corporate governance regulation in Europe," Other publications TiSEM 8651e281-4914-41f2-ac14-1, Tilburg University, School of Economics and Management.
    7. Agyenim Boateng & XiaoGang Bi & Sanjukta Brahma, 2017. "The impact of firm ownership, board monitoring on operating performance of Chinese mergers and acquisitions," Review of Quantitative Finance and Accounting, Springer, vol. 49(4), pages 925-948, November.
    8. Chilosi, Alberto & Damiani, Mirella, 2007. "Stakeholders vs. shareholders in corporate governance," MPRA Paper 2334, University Library of Munich, Germany.
    9. Boubakri, Narjess & Ghouma, Hatem, 2010. "Control/ownership structure, creditor rights protection, and the cost of debt financing: International evidence," Journal of Banking & Finance, Elsevier, vol. 34(10), pages 2481-2499, October.
    10. Omran, Mohammed M. & Bolbol, Ali & Fatheldin, Ayten, 2008. "Corporate governance and firm performance in Arab equity markets: Does ownership concentration matter?," International Review of Law and Economics, Elsevier, vol. 28(1), pages 32-45, March.
    11. Lu, Yun & Ntim, Collins G. & Zhang, Qingjing & Li, Pingli, 2022. "Board of directors’ attributes and corporate outcomes: A systematic literature review and future research agenda," International Review of Financial Analysis, Elsevier, vol. 84(C).
    12. Martin Bugeja & Stephanie Fohn & Zoltan Matolcsy & Neil Fargher, 2016. "Determinants of the levels and changes in non-executive director compensation," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 56(3), pages 627-667, September.
    13. Requejo, Ignacio & Reyes-Reina, Fernando & Sanchez-Bueno, Maria J. & Suárez-González, Isabel, 2018. "European family firms and acquisition propensity: A comprehensive analysis of the legal system’s role," Journal of Family Business Strategy, Elsevier, vol. 9(1), pages 44-58.
    14. Bernard Yeung & Randall Morck & Daniel Wolfenzon, 2004. "Corporate Governance, Economic Entrenchment and Growth," Working Papers 04-21, New York University, Leonard N. Stern School of Business, Department of Economics.
    15. Shan, Yuan George, 2019. "Do corporate governance and disclosure tone drive voluntary disclosure of related-party transactions in China?," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 34(C), pages 30-48.
    16. Jackie Krafft & Yiping Qu & Jacques-Laurent Ravix, 2011. "Gouvernance d'entreprise et performances sectorielles : une réévaluation de la fiabilité des scores et des mesures de bonne gouvernance," Economie & Prévision, La Documentation Française, vol. 0(1), pages 145-158.
    17. Chen, Zhongfei & Wanke, Peter & Tsionas, Mike G., 2018. "Assessing the strategic fit of potential M&As in Chinese banking: A novel Bayesian stochastic frontier approach," Economic Modelling, Elsevier, vol. 73(C), pages 254-263.
    18. Mehdi Bouras & Mohamed Imen Gallali, 2017. "Earnings Management, Equity-based Compensation, Economic Conjuncture and Governance Mechanisms: A Comparative Study between France and the United States," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 585-600.
    19. Kapoor, Supriya & Peia, Oana, 2021. "The impact of quantitative easing on liquidity creation," Journal of Banking & Finance, Elsevier, vol. 122(C).
    20. Julio Pindado & Chabela De La Torre, 2004. "Why is ownership endogenous?," Applied Economics Letters, Taylor & Francis Journals, vol. 11(14), pages 901-904.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bjc:journl:v:7:y:2020:i:5:p:141-152. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Renu Malsaria (email available below). General contact details of provider: https://rsisinternational.org/journals/ijrsi/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.