Exploring Improvements of Post-Acquisitions Corporate Performance in Industrial Sector in the Egyptian Stock Market

Ahmed Wael Abdelrahman; Khairy Elgiziry

doi:doi:10.11648/j.jfa.20190703.11

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Exploring Improvements of Post-Acquisitions Corporate Performance in Industrial Sector in the Egyptian Stock Market

Ahmed Wael Abdelrahman, Khairy Elgiziry

Published in Journal of Finance and Accounting (Volume 7, Issue 3)

Received: 27 April 2019 Accepted: 4 June 2019 Published: 26 June 2019

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Abstract

The purpose of this study is to examine the impact of Egyptians Acquisitions on the post-performance of the acquired companies from the period of 2003 to 2015 by the use of event study methodology. This is done by studying the financial post-performance (includes: liquidity, activity, profitability and capital structure ratios) of a sample consists of 17 companies from the industrial sector as dependent variables, and comparing their results with the pre-performance and the acquisition event as an independent variable. By using a non-parametric Mann-Whitney-Test that can replace the unpaired t-test in the case of small samples, in addition to the factor analysis. The Study tests the significant difference between performance of the acquired companies before and after the acquisition. Empirical results for the whole sample showed a negative significant difference between both the profitability and the capital structure performance of the acquired companies before and after the acquisition. On the other hand, it showed an insignificant difference between both the liquidity and the activity performance of the acquired companies before and after the acquisition. Studying the sub-industrial sectors shows that the Industry Sector has an impact on the performance of the acquired companies and that appears in The Basic Resources and Utilities Sub-sector liquidity, profitability and capital structure performance and has no impact on financial activity performance. For the Construction and Materials Sub-sector there is no impact on the liquidity, profitability and financial activity performance. However, there is a significant impact on the capital structure. For the Personal and Household Products Sub-sector, there is a significant impact on profitability performance, and there is no impact on liquidity, financial activity, and capital structure performance. For the Food, Beverages and Pharmaceutical Sub-sector there is no impact on the liquidity, profitability and financial activity performance and there is a significant impact on capital structure performance. By studying the impact of the Capital Issued on the post-performance of the acquired companies, the researcher showed that there is an impact on the capital structure performance for the acquired companies below 50 M and on profitability performance above 50 M issued capital. On the other hand, there is no impact on the other performance measures for companies above and below 50 M issued capital. Finally, the study results introduced some useful recommendations for the acquisition events in the Egyptian Market.

Published in	Journal of Finance and Accounting (Volume 7, Issue 3)
DOI	10.11648/j.jfa.20190703.11
Page(s)	60-75
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2019. Published by Science Publishing Group

Keywords

Acquisition, Company Performance, Event Study, Industrial Sector, Egyptian Stock Market

References

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Ahmed Wael Abdelrahman, Khairy Elgiziry. (2019). Exploring Improvements of Post-Acquisitions Corporate Performance in Industrial Sector in the Egyptian Stock Market. Journal of Finance and Accounting, 7(3), 60-75. https://doi.org/10.11648/j.jfa.20190703.11

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Ahmed Wael Abdelrahman; Khairy Elgiziry. Exploring Improvements of Post-Acquisitions Corporate Performance in Industrial Sector in the Egyptian Stock Market. J. Finance Account. 2019, 7(3), 60-75. doi: 10.11648/j.jfa.20190703.11

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AMA Style

Ahmed Wael Abdelrahman, Khairy Elgiziry. Exploring Improvements of Post-Acquisitions Corporate Performance in Industrial Sector in the Egyptian Stock Market. J Finance Account. 2019;7(3):60-75. doi: 10.11648/j.jfa.20190703.11

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@article{10.11648/j.jfa.20190703.11,
  author = {Ahmed Wael Abdelrahman and Khairy Elgiziry},
  title = {Exploring Improvements of Post-Acquisitions Corporate Performance in Industrial Sector in the Egyptian Stock Market},
  journal = {Journal of Finance and Accounting},
  volume = {7},
  number = {3},
  pages = {60-75},
  doi = {10.11648/j.jfa.20190703.11},
  url = {https://doi.org/10.11648/j.jfa.20190703.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20190703.11},
  abstract = {The purpose of this study is to examine the impact of Egyptians Acquisitions on the post-performance of the acquired companies from the period of 2003 to 2015 by the use of event study methodology. This is done by studying the financial post-performance (includes: liquidity, activity, profitability and capital structure ratios) of a sample consists of 17 companies from the industrial sector as dependent variables, and comparing their results with the pre-performance and the acquisition event as an independent variable. By using a non-parametric Mann-Whitney-Test that can replace the unpaired t-test in the case of small samples, in addition to the factor analysis. The Study tests the significant difference between performance of the acquired companies before and after the acquisition. Empirical results for the whole sample showed a negative significant difference between both the profitability and the capital structure performance of the acquired companies before and after the acquisition. On the other hand, it showed an insignificant difference between both the liquidity and the activity performance of the acquired companies before and after the acquisition. Studying the sub-industrial sectors shows that the Industry Sector has an impact on the performance of the acquired companies and that appears in The Basic Resources and Utilities Sub-sector liquidity, profitability and capital structure performance and has no impact on financial activity performance. For the Construction and Materials Sub-sector there is no impact on the liquidity, profitability and financial activity performance. However, there is a significant impact on the capital structure. For the Personal and Household Products Sub-sector, there is a significant impact on profitability performance, and there is no impact on liquidity, financial activity, and capital structure performance. For the Food, Beverages and Pharmaceutical Sub-sector there is no impact on the liquidity, profitability and financial activity performance and there is a significant impact on capital structure performance. By studying the impact of the Capital Issued on the post-performance of the acquired companies, the researcher showed that there is an impact on the capital structure performance for the acquired companies below 50 M and on profitability performance above 50 M issued capital. On the other hand, there is no impact on the other performance measures for companies above and below 50 M issued capital. Finally, the study results introduced some useful recommendations for the acquisition events in the Egyptian Market.},
 year = {2019}
}

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TY  - JOUR
T1  - Exploring Improvements of Post-Acquisitions Corporate Performance in Industrial Sector in the Egyptian Stock Market
AU  - Ahmed Wael Abdelrahman
AU  - Khairy Elgiziry
Y1  - 2019/06/26
PY  - 2019
N1  - https://doi.org/10.11648/j.jfa.20190703.11
DO  - 10.11648/j.jfa.20190703.11
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 60
EP  - 75
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20190703.11
AB  - The purpose of this study is to examine the impact of Egyptians Acquisitions on the post-performance of the acquired companies from the period of 2003 to 2015 by the use of event study methodology. This is done by studying the financial post-performance (includes: liquidity, activity, profitability and capital structure ratios) of a sample consists of 17 companies from the industrial sector as dependent variables, and comparing their results with the pre-performance and the acquisition event as an independent variable. By using a non-parametric Mann-Whitney-Test that can replace the unpaired t-test in the case of small samples, in addition to the factor analysis. The Study tests the significant difference between performance of the acquired companies before and after the acquisition. Empirical results for the whole sample showed a negative significant difference between both the profitability and the capital structure performance of the acquired companies before and after the acquisition. On the other hand, it showed an insignificant difference between both the liquidity and the activity performance of the acquired companies before and after the acquisition. Studying the sub-industrial sectors shows that the Industry Sector has an impact on the performance of the acquired companies and that appears in The Basic Resources and Utilities Sub-sector liquidity, profitability and capital structure performance and has no impact on financial activity performance. For the Construction and Materials Sub-sector there is no impact on the liquidity, profitability and financial activity performance. However, there is a significant impact on the capital structure. For the Personal and Household Products Sub-sector, there is a significant impact on profitability performance, and there is no impact on liquidity, financial activity, and capital structure performance. For the Food, Beverages and Pharmaceutical Sub-sector there is no impact on the liquidity, profitability and financial activity performance and there is a significant impact on capital structure performance. By studying the impact of the Capital Issued on the post-performance of the acquired companies, the researcher showed that there is an impact on the capital structure performance for the acquired companies below 50 M and on profitability performance above 50 M issued capital. On the other hand, there is no impact on the other performance measures for companies above and below 50 M issued capital. Finally, the study results introduced some useful recommendations for the acquisition events in the Egyptian Market.
VL  - 7
IS  - 3
ER  -

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Author Information

Ahmed Wael Abdelrahman

Tamkeen Capital Ltd, Cairo, Egypt
Khairy Elgiziry

Finance, Cairo University, Cairo, Egypt

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APA Style

Ahmed Wael Abdelrahman, Khairy Elgiziry. (2019). Exploring Improvements of Post-Acquisitions Corporate Performance in Industrial Sector in the Egyptian Stock Market. Journal of Finance and Accounting, 7(3), 60-75. https://doi.org/10.11648/j.jfa.20190703.11

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ACS Style

Ahmed Wael Abdelrahman; Khairy Elgiziry. Exploring Improvements of Post-Acquisitions Corporate Performance in Industrial Sector in the Egyptian Stock Market. J. Finance Account. 2019, 7(3), 60-75. doi: 10.11648/j.jfa.20190703.11

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AMA Style

Ahmed Wael Abdelrahman, Khairy Elgiziry. Exploring Improvements of Post-Acquisitions Corporate Performance in Industrial Sector in the Egyptian Stock Market. J Finance Account. 2019;7(3):60-75. doi: 10.11648/j.jfa.20190703.11

Copy | Download

@article{10.11648/j.jfa.20190703.11,
  author = {Ahmed Wael Abdelrahman and Khairy Elgiziry},
  title = {Exploring Improvements of Post-Acquisitions Corporate Performance in Industrial Sector in the Egyptian Stock Market},
  journal = {Journal of Finance and Accounting},
  volume = {7},
  number = {3},
  pages = {60-75},
  doi = {10.11648/j.jfa.20190703.11},
  url = {https://doi.org/10.11648/j.jfa.20190703.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20190703.11},
  abstract = {The purpose of this study is to examine the impact of Egyptians Acquisitions on the post-performance of the acquired companies from the period of 2003 to 2015 by the use of event study methodology. This is done by studying the financial post-performance (includes: liquidity, activity, profitability and capital structure ratios) of a sample consists of 17 companies from the industrial sector as dependent variables, and comparing their results with the pre-performance and the acquisition event as an independent variable. By using a non-parametric Mann-Whitney-Test that can replace the unpaired t-test in the case of small samples, in addition to the factor analysis. The Study tests the significant difference between performance of the acquired companies before and after the acquisition. Empirical results for the whole sample showed a negative significant difference between both the profitability and the capital structure performance of the acquired companies before and after the acquisition. On the other hand, it showed an insignificant difference between both the liquidity and the activity performance of the acquired companies before and after the acquisition. Studying the sub-industrial sectors shows that the Industry Sector has an impact on the performance of the acquired companies and that appears in The Basic Resources and Utilities Sub-sector liquidity, profitability and capital structure performance and has no impact on financial activity performance. For the Construction and Materials Sub-sector there is no impact on the liquidity, profitability and financial activity performance. However, there is a significant impact on the capital structure. For the Personal and Household Products Sub-sector, there is a significant impact on profitability performance, and there is no impact on liquidity, financial activity, and capital structure performance. For the Food, Beverages and Pharmaceutical Sub-sector there is no impact on the liquidity, profitability and financial activity performance and there is a significant impact on capital structure performance. By studying the impact of the Capital Issued on the post-performance of the acquired companies, the researcher showed that there is an impact on the capital structure performance for the acquired companies below 50 M and on profitability performance above 50 M issued capital. On the other hand, there is no impact on the other performance measures for companies above and below 50 M issued capital. Finally, the study results introduced some useful recommendations for the acquisition events in the Egyptian Market.},
 year = {2019}
}

Copy | Download

TY  - JOUR
T1  - Exploring Improvements of Post-Acquisitions Corporate Performance in Industrial Sector in the Egyptian Stock Market
AU  - Ahmed Wael Abdelrahman
AU  - Khairy Elgiziry
Y1  - 2019/06/26
PY  - 2019
N1  - https://doi.org/10.11648/j.jfa.20190703.11
DO  - 10.11648/j.jfa.20190703.11
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 60
EP  - 75
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20190703.11
AB  - The purpose of this study is to examine the impact of Egyptians Acquisitions on the post-performance of the acquired companies from the period of 2003 to 2015 by the use of event study methodology. This is done by studying the financial post-performance (includes: liquidity, activity, profitability and capital structure ratios) of a sample consists of 17 companies from the industrial sector as dependent variables, and comparing their results with the pre-performance and the acquisition event as an independent variable. By using a non-parametric Mann-Whitney-Test that can replace the unpaired t-test in the case of small samples, in addition to the factor analysis. The Study tests the significant difference between performance of the acquired companies before and after the acquisition. Empirical results for the whole sample showed a negative significant difference between both the profitability and the capital structure performance of the acquired companies before and after the acquisition. On the other hand, it showed an insignificant difference between both the liquidity and the activity performance of the acquired companies before and after the acquisition. Studying the sub-industrial sectors shows that the Industry Sector has an impact on the performance of the acquired companies and that appears in The Basic Resources and Utilities Sub-sector liquidity, profitability and capital structure performance and has no impact on financial activity performance. For the Construction and Materials Sub-sector there is no impact on the liquidity, profitability and financial activity performance. However, there is a significant impact on the capital structure. For the Personal and Household Products Sub-sector, there is a significant impact on profitability performance, and there is no impact on liquidity, financial activity, and capital structure performance. For the Food, Beverages and Pharmaceutical Sub-sector there is no impact on the liquidity, profitability and financial activity performance and there is a significant impact on capital structure performance. By studying the impact of the Capital Issued on the post-performance of the acquired companies, the researcher showed that there is an impact on the capital structure performance for the acquired companies below 50 M and on profitability performance above 50 M issued capital. On the other hand, there is no impact on the other performance measures for companies above and below 50 M issued capital. Finally, the study results introduced some useful recommendations for the acquisition events in the Egyptian Market.
VL  - 7
IS  - 3
ER  -

Copy | Download