Integrated acquisition improves target firms performance

Johan, Suwinto Integrated acquisition improves target firms performance. International Journal of Management Reviews.

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Abstract

The aim of this paper is to study the financial performance between pre and post acquisition of Indonesia finance company industry over the period of 2002-2011. The acquisition can be categorized into 3 categories based on the acquirer. The acquirer can be categorized into banking related acquirer, automotive related acquirer, and unrelated or independent acquirer. The banking industry which provides majority of funding, has made finance companies as part of their integration business model. The automotive manufacturer and dealer which provides the products of financing, has the similar strategy. The acquisition of finance companies has reached more than 30 transactions from 2002 till 2012. We analyzed 7 micro key financial ratios (profitability, efficiency, growth, firm size, liquidity, solvability and risk). We use the non parametric Wilcoxonand the parametric Panel Data. The empirical results show that finance companies have better efficiency in operation, lower leverage, bigger size, and better growth in asset after the acquisition. However, the profit has decreased post the acquisition. There is no significant effect in liquidity ratio and provisioning ratio. All three categories have showed improved efficiency and firm size. Only forward integration has improved the profitability through an increase in the portfolio yield. In contrary, the unrelated acquisition has reduced the growth ability after the acquisition.

Item Type:	Article
Subjects:	G Strategic > GA Organizational development G Strategic > GC Organizational strategy
Depositing User:	Slamet SPJ Pujiana
Date Deposited:	20 Nov 2020 01:18
Last Modified:	20 Nov 2020 01:18
URI:	http://repo.ppm-manajemen.ac.id/id/eprint/1332

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