Acquisition Activity Research Articles

Two decades of cross-border mergers and acquisitions research: A bibliometric analysis

Purpose The purpose of this study is to present the overall trend and dynamics in global mergers and acquisitions activity while suggesting future research avenues in this domain. The analysis covers two aspects to examine the main contours of the domain, that is performance analysis followed by thematic cluster analysis. Design/methodology/approach Bibliometric analysis has been used for examining 1,433 publications extracted from the Scopus database to identify the research trend between 2000 and 2021. With the help of VosViewer (a bibliometric software), bibliographic coupling, citation, co-authorship, keyword and network analysis have been carried out. Findings The analysis reveals that most of the research on cross-border mergers and acquisitions (CBMA) is concentrated in the context of developed markets, USA and UK being the largest. Most of the research till date is confined to wealth effects, value creation, corporate governance, socio-cultural aspects and various determinants of CBMA, all from the standpoint of the acquirer. Practical implications The present study highlights numerous opportunities for future research based on empirical analysis. There exists a dearth of studies around CBMA in the context of emerging nations which provides a relatively unexplored field to carry out research work. Originality/value The study makes use of a comprehensive list of keywords to have an extensive analysis. This is a pioneering study that has used bibliographic coupling of documents for content analysis and to the best of authors’ knowledge, no previous works on cross-border acquisitions have performed bibliographic coupling for this.

The Effect of Mergers and Acquisitions on the Financial Performance Companies listed on the Indonesia Stock Exchange for the 2020-2022 period

This research aims to determine the effect of mergers and acquisitions on company financial performance in companies listed on the Indonesia Stock Exchange. The data collection method used in this research is a purposive sampling technique, based on existing criteria, there are 30 sample companies. The company's financial performance is measured using financial ratios, namely: Return On Assets (ROA), Current Ratio (CR) and Debt To Asset Ratio (DAR). The analytical method used in this research is the T-test difference analysis and the Wilcoxon signed rank test. The research results show that companies that carry out mergers and acquisitions in 2020-2022 with an average period of 1 year before and 1 year after the merger and acquisition show that there is no difference in profitability as indicated by Return On Assets (ROA), liquidity as indicated by Current Ratio (CR), solvency shown by Debt To Asset Ratio (DAR), before and after mergers and acquisitions. This research was conducted incompanies that carry out mergers and acquisitions in 2020-2022 and are listed on the Indonesian Stock Exchange. This study provides an in-depth understanding of how mergers and acquisitions affect the financial performance of companies in the Indonesian capital market. Therefore, stakeholders such as investors, company managers, regulators and academics can gain a better understanding of the impact of merger and acquisition activities on the Indonesian economy. There has been no research regarding the effect of mergers and acquisitions on financial performance in the 2020-2022 period in Indonesia. This knowledge gap is the reason for conducting this research.

Peer spillovers of environmental penalties - Evidence from green mergers and acquisitions

Using data on environmental penalties and green mergers and acquisitions in China from 2011 to 2022, we study the spillover effects of environmental penalties on peer firms. Our findings indicate that when firms within an industry are penalized for environmental violations, other firms in the same industry tend to increase their green merger and acquisition activities. This tendency is likely due to the heightened environmental concern resulting from the penalties. Furthermore, the spillover effect is more pronounced in firms with lower financial constraints and higher information transparency.

Influence of long-term ecological reclamation on carbon and nitrogen cycling in soil aggregates: The role of bacterial community structure and function

Understanding the influence of microbial taxa and functions on soil carbon (C) and nitrogen (N) cycling, particularly concerning soil aggregate sizes, is crucial for ecosystem management. This study examines the taxonomic and functional dynamics of soil bacterial communities within different aggregate sizes over time. Soil samples from a reclamation forest on the Loess Plateau in North China were collected across reclamation ages of 0, 3, 18, and 28 years. Soil aggregates were categorized into large macro-aggregates (>2000 μm), small macro-aggregates (250–2000 μm), and micro-aggregates (<250 μm) using a modified dry-sieving method. Soil aggregate stability, C and N concentrations, newly derived plant C, enzyme activities, bacterial communities, and functional genes in each aggregate fraction were systematically analyzed. There was a notable increase in soil aggregate stability and a higher proportion of large aggregates was found with increasing forest age. There were significant differences in bacterial community structures, particularly between micro-aggregates and large macro-aggregates and across different forest ages. Reclamation led to an increased abundance of copiotrophic bacterial taxa. Decreases in N-acquiring enzyme activity in micro-aggregates were contrasted by an increase in C, N, and phosphorus (P) acquisition activities in larger aggregates over time. Larger aggregates showed a faster recovery of C and N cycling genes accompanied by a significant enhancement in acetyl-CoA and ammonia oxidation processes, underscoring their importance in soil nutrient cycling. These results highlight the critical role of aggregate size in shaping microbial community structures and functions that influence soil C and N cycling during reclamation and provide new perspectives highlighting the significance of incorporating aggregate size considerations into soil management and reclamation strategies.

Technology acquisitions and investor expectations: Reputation and expectancy violation perspectives

AbstractEmploying the organizational reputation lens and expectancy violation theory (EVT), I examine how financial market investors (investors) affect the technology acquisition activity and the likelihood of survival of firms facing technological change. I theorize that when a firm has a growth reputation, that is, investors expect revenue growth in future periods, the likelihood of making an acquisition will increase in anticipation of a positive expectancy violation on the part of investors. In contrast, for a firm that has an income reputation, that is, investors expect shareholder returns in future periods, the likelihood of making an acquisition will decrease in avoidance of a negative expectancy violation on the part of investors. I predict a novel moderating effect of investor expectations—a firm's acquisition activity will exert a stronger positive effect on its likelihood of surviving technological change when investor expectations are growth‐oriented, that is, when there is a positive expectancy violation. Using a multi‐industry sample of industry convergence, a salient form of technological change, I find support for my theoretical predictions. I advance research that examines the reactions of investors to firm strategies during technological change to the domain of technology acquisitions, a salient strategic decision. I also expand the predictive utility of the reputation lens and EVT to the context of firm survival during technological change.

EFFECTS OF MERGERS AND ACQUISITIONS ON COMPETITION IN INDIA

Competition law typically considers those merger cases where the main concern is that the merging parties would become so dominant in the market that they will increase the rates they charge the customers. This happens, mostly, because the merged entity has now gained a dominating position, as a consequence of the merger, to manipulate the market. Some mergers, on the other hand, minimize competition thus dropping rates that vendors demand. Thus, mergers and acquisitions have the capacity to hurt competition at both ends- from where the merged entity buys, and where it sells and this they can do in varied ways. Merger and Acquisitions can be anti-competitive where they include trends like limiting output or imposing price, fixing prices between competitors, or sale or supply terms on down the stream intermediaries. Merger and acquisition activity has been on a rise in India, and their impact on competition has led to many changes in the competition law. In this article we would be exploring how the merger and acquisition activity hurts competition and how the law in India has had to change to combat its damaging effects.

THE IMPACT OF GAMIFIED EDUCATIONAL APPLICATIONS ON SECONDARY SCHOOL STUDENTS' ACHIEVEMENT IN LEARNING ENGLISH AS A FOREIGN LANGUAGE

This study investigates the effectiveness of gamified educational applications in improving students' involvement in the process of learning the English language among secondary school students. The study employs a comparative methodology to evaluate the influence of gamification on students' motivation, language acquisition, and overall learning experience. The study uses a sample of students with different language backgrounds and applies both quantitative and qualitative methodologies to assess the efficacy of gamified educational apps in comparison to conventional language learning approaches. The results demonstrate a notable and favorable association between the use of gamified language learning and heightened student involvement. The use of gamification components, such as interactive challenges, prizes, and competition, has been proven to create a dynamic and interesting learning environment. This, in turn, motivates students to actively engage in language acquisition activities. The comparative analysis emphasizes the benefits of gamified applications in enhancing language proficiency, memory, and interpersonal abilities. Furthermore, the study examines how technology facilitates language learning by including gamification. It assesses the accessibility, usefulness, and adaptability of these programs. The findings of this research add to the continuing discussion on creative teaching methods, providing valuable information on the effectiveness of gamified educational apps as instruments for teaching the English language. The results endorse the incorporation of gamified educational apps into language classes, providing a more engaging and participatory learning experience for learners.

A panel data regression model for defense merger and acquisition activity

PurposeThis paper examines the relationship between a prime contractor's financial health and its mergers and acquisitions (M&amp;A) spending in the defense industry. It aims to provide models that give the United States Department of Defense (DoD) indications of future M&amp;A activity, informing decision-makers and contributing to ensuring competitive markets that benefit the consumer.Design/methodology/approachThe study uses panel data regression models on 40 companies between 1985 and 2021. The company's financial health is assessed using industry-standard financial ratios (i.e. measures of profitability, efficiency, solvency and liquidity) while controlling for economic factors such as national productivity, defense budgets and firm size.FindingsThe results show a significant relationship between efficiency and M&amp;A spending, indicating that companies with lower efficiency tend to spend more on M&amp;As. However, there was no significant relationship between M&amp;A spending and a company's profitability or solvency. These results were consistent with previous research and the study's hypotheses for profitability and solvency. However, the effect of liquidity was the opposite of the expected result, possibly due to the defense industry's different view on liquidity compared to previous research.Originality/valueThe paper provides insights into the relationship between a prime contractor's financial health and its M&amp;A spending, a topic with limited research. The findings can inform policymakers and regulators on the industrial base's future M&amp;A activity, ensuring competitive markets that benefit the consumer.

Strategic Process of Mergers and Acquisitions Market Plans

Merger and acquisition activity in India is booming, the percentage of cross-border transactionshas risen significantly. Flow of FDI’s is greatly encouraged with enactment of new laws and tweaking ofexisting policies. In the IT sector phenomenal growth of cross-border transactions is recorded. Foreignonline firms are focusing on companies in the digital space to gain access to skilled talent and aburgeoning market. However there are factors that need to be ascertained in order to fine-tune theecosystem to be more attractive to the investor community. What emerges from these facts is that thecountry’s regulatory regime has to be thoroughly reviewed in order to devise measures to fine-tune itoptimally for the growth and prosperity of the country’s IT sector. The two biggest obstacles in the wayof completing a merger or an amalgamation remains the often long drawn procedure required for thesanction of a scheme of arrangement and achieving a culture synergy between the combining entities.

The real effects of M&amp;As on targets’ peers

AbstractThis paper studies the real effects of targets’ acquisitions on their peers through investigating the real earnings management (REM) behavior of the targets’ rivals following the mergers and acquisitions (M&amp;As). Using a difference‐in‐differences design, we find that, on average, rivals of acquisition targets would engage in more REM after M&amp;A announcements. We further find that within rivals of the target, the post‐announcement increase in REM is more pronounced when: (1) the rival is relatively less similar to the target; (2) the rival serves as the targets’ rival more than once within a year; (3) the target earns a higher bidding premium or positive abnormal returns; or (4) the rival has the higher institutional ownership or more analyst following. Additional analyses reveal that rivals engaging in more REM would have a higher likelihood of being acquired in subsequent years and would be sold at higher premiums. We also find that targets’ rivals boost their short‐term performance by engaging in REM activities at the cost of their long‐term performance. Our results are robust to various robustness checks. Overall, our evidence suggests that an acquisition activity could have a real effect on the target's industry, i.e., the effect on the accounting choices of the whole industry.

Carbon risk and investment efficiency: A merger and acquisition perspective

With the increasingly stringent global restrictions on carbon emissions, firms are facing growing carbon risks, which may not only drive up firms' pollution control costs but also force them to improve investment efficiency by optimizing investment and saving costs. Taking the Paris Agreement event as the background and using the data of listed companies in China from 2007 to 2020 and a difference-in-differences model, this paper reveals that the increase in carbon risk can significantly improve the investment efficiency of China's carbon-intensive firms. In addition, we find that the increase in carbon risk can encourage firms to carry out mergers and acquisitions to improve investment efficiency. Our findings provide Chinese evidence for the effective link between carbon risk and firm investment efficiency and may serve as a decision-making reference for carbon-intensive enterprises to improve investment efficiency through merger and acquisition activities in the context of increasing carbon risk.

Driving Organic Customer Acquisitions through Community Marketing in Digital Banking Application

The objective of this research is to identify and analyze the key factors that influence customers on the reluctance of being loyal or become the advocator of J Bank and to propose the organic customer acquisitions strategies to be applied to J Bank through community engagement in J Bank. The era of Industry 4.0 has transformed production by integrating digital and internet technologies with traditional industries, enhancing efficiency and effectiveness in transactions. In Indonesia, the number of digitally active banking consumers has increased significantly, making up 32% of the banked population since 2014. This growth underscores the value of digital consumers to banks. The sector has become highly competitive, with fintech companies disrupting traditional banks by offering innovative solutions like e-wallets, loans, and digital payments. Established banks are investing in digital banking to keep pace with new startups. J Bank, Indonesia’s first digital banking application, offers comprehensive services such as account creation, transactions, and financial management via smartphone. Targeting tech-savvy individuals with middle to upper economic status, J Bank provides features like Send It for transactions, QRIS for touchless payments, and various saving and loan options. Its innovative approach has attracted millennials, Gen Z, and even seniors, positioning it as a leading digital banking solution. However, J Bank experienced a significant drop in organic acquisitions from 2020 to 2022, partly due to issues like fraud and cybercrime, which led to negative sentiment and user attrition. Using qualitative approach with 6 survey respondents that consist of existing user of J Bank and existing Co.Create member, and also former J Bank users and former Co.Create members. This research using thematic analysis with internal and external analysis to explore the potential solutions. For internal analysis, the author is using Marketing Mix analysis. Meanwhile for external analysis, the author is using Porter Five Forces analysis, Competitor analysis, and SWOT analysis. Based on the analysis, this research proposed several organic customer acquisitions activity to be implemented in J Bank through community marketing approach. J Bank offers a wide range of services, including account creation, transactions, and financial management via smartphone, targeting tech-savvy individuals from middle to upper economic backgrounds. Despite its initial success, attracting millennials, Gen Z, and even seniors, J Bank faced a decline in organic acquisitions from 2020 to 2022 due to issues like fraud and cybercrime, which led to negative sentiments and user attrition. The research utilized a qualitative approach, involving surveys of six respondents, including current and former users of J Bank and members of its Co.Create community. Thematic analysis was conducted, incorporating internal analysis with the Marketing Mix and external analysis with Porter’s Five Forces, competitor analysis, and SWOT analysis. The findings suggest that increasing community engagement and addressing security concerns are crucial for improving J Bank’s customer retention and acquisition. Based on these insights, several community marketing strategies are recommended to enhance organic customer acquisition.

Does M&A activity spin the cycle of energy prices?

This research investigates the predictive power of mergers and acquisitions (M&A) activity on returns and volatility in energy commodities from January 1997 to September 2023. Utilizing a novel time-varying robust Granger causality framework, we analyse the dynamic relationship between M&A activity and energy returns and volatility within the global oil and gas (O&G) industry. In addition, we examine the network structure of M&A activity and energy prices across different quantile regimes. We find that M&A activity exhibits significant time-varying forecasting ability for both energy returns and volatility. Specifically, M&A transactions led by oil acquirers, representing deals where both the acquirer and target are within the O&G industry, demonstrate stronger forecasting ability for energy returns than M&A transactions led by acquirers from non-O&G industries. Conversely, M&A activity by non-O&G acquirers shows greater predictive ability for energy volatility. Robustness checks support our main findings. First, our multi-horizon model reveals significant bi-directional causality between M&A activity and energy series for 3 and 6-month forecasting horizons, which affirms a lasting influence on energy returns and volatility. Second, the strength of connectedness at extreme quantiles surpasses that at the median, with its magnitude increasing over the forecasting horizon. Third, our baseline results remain stable across varying rolling window sizes. These findings have important implications for policymakers and investors, suggesting that M&A activity within the O&G industry should be considered when making decisions in the energy market, as it plays a crucial role in predicting the dynamic direction of energy prices.

Cash is queen? Impact of gender-diverse boards on firms' cash holdings during COVID-19

This study examines the role of gender-diverse boards in preserving cash holdings during crises. Using a sample of UK firms during the COVID-19 period, we find that firms with more female directors had higher cash holdings. This increase in cash reserves is primarily driven by reduced board compensation, reflecting the careful stewardship associated with gender-diverse boards. Interestingly, we find no evidence of female directors reducing acquisition activity or capital expenditures, suggesting that these firms did not compromise on growth prospects while building their cash buffer. Our study underscores the value of gender-diverse boards in navigating firms through crises without sacrificing shareholder value. Our results remain robust even after controlling for endogeneity and alternative estimation techniques. The findings hold significant implications for investors, policymakers, and advocates of gender diversity in boardrooms, emphasizing the financial prudence that gender diversity can bring in crisis management.

Evaluasi Perubahan Segmentasi Kinerja Keuangan PT. KB Bukopin, TBK Sebelum dan Sesudah Akuisisi dengan Metode K-Means Clustering

This study aims to evaluate changes in the segmentation of PT KB Bukopin Tbk's financial performance before and after Kookmin Bank's acquisition. This study uses the K-means clustering method using secondary data in the form of financial data taken from the official website of the Indonesia Stock Exchange, IDX.co.id. The results of the k-means analysis showed that the change in BBKP segmentation from Category 4 (cluster E) in 2019 to Category 3 (cluster C) in 2023 showed significant changes in the company's financial stability and capital adequacy. This research reveals that post-acquisition strategies and policies have successfully made a substantial impact on BBKP's financial structure, as evidenced by a positive increase in the solvency ratio (DER) and capital adequacy ratio (CAR). However, the decline in return on assets (ROA) indicates that operational efficiency is required to improve profitability. The results of the comprehensive and ongoing evaluation show how important it is to thoroughly understand the impact of acquisition activities in the banking industry.

THE ROLE OF THE DUE DILIGENCE PROCEDURE IN THE DECISION MAKING FOR MERGERS AND ACQUISITIONS

Despite the extensive research on mergers and acquisitions, the subject of evaluation at the pre-investment stage is in continuous evolution. In the given context, it becomes important to understand the role of the Due Diligence procedure as a valuable tool for identifying risks, assessing operational and financial efficiency or inefficiency, and other aspects that can impact the performance of the transaction. The purpose of this research is to explore the interconnection between the following three important topics: Due Diligence, risk, performance. To make the clarification of this issue, the critical analysis of the opinions of other researchers, the trend analysis of evolution, and the document analysis was applied. By examining these interconnections, the study seeks to provide a comprehensive understanding of how Due Diligence influences the success of mergers and acquisitions transactions and offers insights for companies considering mergers and acquisitions activities, helping them to navigate potential challenges and optimize their strategies.

Stock market return and merger and acquisition activity in Poland

This article explores mergers and acquisitions trends in the Polish market in a period between 2019 and 2022, focusing on transactions exceeding one million dollars and their correlation with sector-specific stock market returns. The research reveals that the real estate sector, encompassing both development and property management, dominated M&amp;A activity, comprising 25% of transactions in 2022. Significant positive correlations were observed between transaction volumes and average stock market returns, notably in sectors like real estate (R-Pearson = 0.75) and TMT (R-Pearson = 0.87). These findings indicate that sectors with higher returns attracted more M&amp;A activity, reflecting investor confidence and strategic growth opportunities. Despite fluctuations in company valuations post-pandemic, the overall volume of M&amp;A transactions continued to rise, driven by firms with strong cash reserves leveraging lower valuations for strategic expansions. The study anticipates sustained momentum in technology and real estate sectors, alongside emerging opportunities in energy and biotechnology, influenced by global trends and technological advancements. This research contributes valuable insights into the evolving landscape of M&amp;A in Poland, highlighting sectoral attractiveness and strategic implications for investors and businesses.

An extended event study methodology and its application in the HNA group's overseas market contraction

This paper introduces a novel framework for analyzing the performance of cross-border merger and acquisition (M&A) activities in international business. It investigates whether the contraction of overseas market activities can mitigate financial crises, using the case study of a Chinese multinational enterprise (MNE). Traditional event study methodology, commonly used for assessing business performance changes, relies on assumptions of normality and homoscedasticity in data. However, real financial data often exhibits high volatility and non-normal distribution, rendering traditional methods inadequate for estimation. To address this limitation, we propose an enhanced analytical framework integrating the Shapiro–Wilk test, event studies, quantile regression, and nonparametric rank tests. This approach provides more robust estimates, facilitating a more accurate and comprehensive analysis of business performance changes under specific events. Applying this methodology to assess the short-term performance of HNA Group, a cross-border airline in China, during its financial crisis, we find that while overseas market contraction events generate overall positive short-term value for enterprises, the impact varies depending on the assets sold. However, given HNA Group's substantial debt burden, the positive effect is minimal, indicating that overseas market contraction alone is insufficient as a "self-help" strategy in addressing corporate financial crises.

Natural Experiments and Causation in Strategy Research

Research to inform organizational strategy decisions studies the impact of specific managerial decisions on performance. While links from decisions to outcomes can be convincingly identified in individual, specific circumstances, trying to do the same with a larger set of decisions and outcomes can be problematic. In a situation with a substantive sample, relying on standard metrics such as financial statements, the link to particular outcomes can be difficult to establish. Especially when trying to choose metrics not already correlated in some way. Our research is generally in the field of knowledge management (KM). The discipline has an extensive history of attempts to link better management of knowledge and other intangibles to performance outcomes. While the performance outcomes are fairly straightforward (financial success such as profitability or return on investment, innovation success, etc.), the metric for knowledge management is harder to pin down. The literature shows dozens of approaches. Some are for single firms or a small sample, but even if focusing only on metrics for a larger sample of firms, disagreement exists. But even when a KM metric is chosen for a larger sample, there is often a direct tie between input and output measures, making correlation difficult to establish, let alone causation. If profitability is part of both the input and output measures, of course they are correlated. The most advanced statistical techniques don’t establish anything more than what the researcher should already know from a cursory look at the logic of the study and the specifics of the variables. As a result, whether KM actually results in better organizational performance is still an open and much debated question in the field. One research approach that can get around this issue is the natural experiment. Pioneered by Nobel winner David Card and others, the natural experiment uses two measurements with a clear, consequential event separating the two—minimizing the impact of samples that might otherwise be connected contemporaneously. The event, such as a change in law, provides a change in circumstances delinking the measures. Whether structured as a pre/post experiment (measuring before or after the intervening event) or control/experimental group experiment (one group exposed to the event, the other not), the outcome can provide convincing results and can even suggest causation. This paper will cover our work with natural experiments in relation to KM and performance outcomes for merger and acquisition (M&amp;A) activity. Can KM metrics before an M&amp;A event predict the success of the event? Success can be defined by the change in financial performance after the event takes place.

Accounting treatment and impact of gambling agreement in Lianchuang Co., LTD

With the full entry of China's capital market into the registration system, the merger and acquisition activities of listed companies will become more and more market-oriented. In order to reduce the transaction risk of the two parties, the listed companies will often attach a gambling agreement in the merger and acquisition business. This paper adopts the case study method, with Shandong Lianchuang Internet Media Co., Ltd. acquired Shanghai Pan Investment Network Technology Co., Ltd. as the research object, and the analysis of Lianchuang Company in 2017-2020 accounting treatment. Summing up the current business accounting standards related to the gambling agreement accounting treatment facing the dilemma. It can be seen from the accounting treatment of contingent consideration that there are still some misunderstandings in the listed companies' understanding of contingent consideration, which reflects the lack of professionalism in the accounting treatment regulations related to the gambling agreement.