Abstract
This research paper focuses on recent business trend in Jordan which attracted us as researchers to investigate Merger & Acquisition’s ability to create and realize more value than the parties can alone, and whether the value earned by the merged firms have motivated them to contribute to the combination. The method used to analyze post-merger financial performance was carried out by adopting the accounting return method and the stock price method, which measures and observes the stock market price in terms of market value, earnings per share (EPS), and price earnings ratio (P/E) of the merged firms. Analyzing the annual reports of the two Jordanian banks, the study concluded that the ratio analysis of AJIB and Safwa Bank show different trends after Merger & Acquisition. Our analysis shows decreasing values in the first two years after the acquisition, but gradually increasing values in subsequent years. The study concluded that the fluctuation of results may be attributed to the difficulties in managing the increased volume of assets after the merger as well as to non-financial reasons such as the human behavior of the employee resistance after the acquisition, where the employees of the acquired firm consider merger as a hostile takeover.
Highlights
Public companies, in general, have a significant impact on the economies of countries as they are the main engine of economic operations
To examine the effects of merger and acquisitions (M&As) on the merged firms’ post-merger financial performance and stock market price, this paper addresses two questions: 1. Whether Return on Investment & Return on Equity improves after merger & acquisition or not; 2
It can be noticed that the Return on Investment is somehow decreasing even though net income and total assets are increasing, and this difference can be attributed to the increased volume of assets after the acquisition period
Summary
In general, have a significant impact on the economies of countries as they are the main engine of economic operations. Due to fierce competition that resulted from globalization and free trade, many companies have raised their working capital through merger and acquisitions (M&As) to expand their operations so as to increase their market share. The merger process in most cases will lead to stronger companies financially and administratively and will enable these companies to enter into new markets and new types of activities with the hopes to improve performance by applying the comparative advantages that are believed to be enjoyed or characterized by the other company, especially in terms of cost pressures and expand the geographical or qualitative scope of the processes or both and increase reserves and reserve provisions and reduce the necessary burdens or benefit from tax advantages, and in general it will improve the capacity in order to manage risk and increase profit
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
