IDEAS home Printed from https://ideas.repec.org/a/jaf/journl/v12y2021i2n365.html
   My bibliography  Save this article

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
    as

    Download full text from publisher

    File URL: http://34.195.102.181/journal/index.php/index/article/view/481
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    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.
    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. Ying Li & Yung-Ho Chiu & Tai-Yu Lin & Tzu-Han Chang, 2020. "Pre-Evaluating the Technical Efficiency Gains from Potential Mergers and Acquisitions in the IC Design Industry," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 19(02), pages 525-559, April.
    2. Carles Méndez-Ortega & Mercedes Teruel, 2020. "To acquire or not to acquire: the effects of acquisitions in the software industry," Journal of Evolutionary Economics, Springer, vol. 30(3), pages 793-814, July.
    3. Ouyang, Shanshan & Li, Yanxi & Wu, Haowen & Zhao, Heng & Xu, Runxiang, 2023. "Structure and evolution of the greenfield FDI network along the belt and road," Research in International Business and Finance, Elsevier, vol. 64(C).
    4. Wang, Hui & Si, Ieongcheng & Chen, Zhihua, 2024. "Does the Belt and Road Initiative promote China and the countries along the route to reconstruct the global value chain? Evidence from value-added trade," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 63-83.
    5. Méndez Ortega, Carles, & Teruel, Mercedes, 2018. "To acquire or not to acquire: Mergers and Acquisitions in the Software Industry," Working Papers 2072/307043, Universitat Rovira i Virgili, Department of Economics.
    6. Evans Opoku‐Mensah & Yuming Yin & Sandra Chukwudumebi Obiora & Peter Adjei Darko, 2022. "Grabbing hand or helping hand? Ownership interventions and acquirers returns; the role of provincial idiosyncrasies," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 4797-4815, October.
    7. Genc, Omer F. & Luo, Dan, 2024. "A different view on acquisition paradox: Empirical examination of international acquisitions from competitiveness perspective," Journal of Economics and Business, Elsevier, vol. 130(C).
    8. Jheyce Milena Silva Barros & Brigitte Renata Bezerra Oliveira & Telma Lúcia Andrade Lima & Marcos Felipe Falcão Sobral, 2024. "Corporate strategy evaluation (CORE): a new method to measure strategies in organizations," SN Business & Economics, Springer, vol. 4(6), pages 1-18, June.
    9. Liu, Dandan & Zhu, Ying & Xie, Xinxin, 2024. "The tangible hand? Does Communist Party involvement in governance promote corporate M&A performance," Finance Research Letters, Elsevier, vol. 61(C).
    10. Gaganis, Chrysovalantis & Pasiouras, Fotios & Voulgari, Fotini, 2019. "Culture, business environment and SMEs' profitability: Evidence from European Countries," Economic Modelling, Elsevier, vol. 78(C), pages 275-292.

    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

    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:jaf:journl:v:12:y:2021:i:2:n:365. 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: Oussama Quentin Kasseh (email available below). General contact details of provider: https://edirc.repec.org/data/urredtn.html .

    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.