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Effect of Acquisition Activity on the Financial Indicators of Companies: An Application in BIST

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  • Eda ORUÇ ERDOÄžAN

    (Assistant Professor, Akdeniz University, Faculty of Economics and Administrative Sciences, Department of Business Administration, Turkey,)

  • Murat ERDOÄžAN

    (Research Assistant, Akdeniz University, Faculty of Economics and Administrative Sciences, Department of Business Administration, Turkey,)

Abstract

The main objective of company managers is to raise market power that is the market price of the company, and hence to increase profitability. The merger and acquisition activities, which is one of the restructuring processes relied on by companies in the world and Turkey are important to achieve this goal. In this study, it is aimed to determine whether the acquisition activities of companies cause any change in various financial indicators of companies. Accordingly, it was also attempted to determine the financial ratios that present a significant change. In this context, Wilcoxon Signed Rank test was used in the SPSS-16 program to analyze whether there is a significant difference in the financial ratios caused by the acquisition activities of 10 companies publicly-traded on the Borsa Istanbul (BIST - Istanbul Stock Exchange) and had acquisition activities in 2004-2005. According to the results obtained, it was identified that assets turnover ratio, the net profit margin and leverage ratio of the companies significantly differed before and after the acquisition activities of the companies, however, no significant difference was found in the current ratios and average stock returns of the companies between these periods.

Suggested Citation

  • Eda ORUÇ ERDOÄžAN & Murat ERDOÄžAN, 2014. "Effect of Acquisition Activity on the Financial Indicators of Companies: An Application in BIST," International Journal of Business and Social Research, LAR Center Press, vol. 4(7), pages 17-22, July.
    • Handle: RePEc:lrc:larijb:v:4:y:2014:i:7:p:17-22
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    1. Hsiang-Hsi Liu & Tser-Yieth Chen & Lin-Yen Pai, 2007. "The Influence of Merger and Acquisition Activities on Corporate Performance in the Taiwanese Telecommunications Industry," The Service Industries Journal, Taylor & Francis Journals, vol. 27(8), pages 1041-1051, December.
    2. Jan Camerlynck & Hubert Ooghe & Tine Langhe, 2005. "Pre-Acquisition Profile of Privately Held Companies Involved in Take-Overs: An Empirical Study," Small Business Economics, Springer, vol. 24(2), pages 169-186, March.
    3. Hubert Ooghe & Elisabeth Laere & Tine Langhe, 2006. "Are Acquisitions Worthwhile? An Empirical Study of the Post-Acquisition Performance of Privately Held Belgian Companies," Small Business Economics, Springer, vol. 27(2), pages 223-243, October.
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