The Impact of Acquisitions on the Financial Performance of Companies in the Gulf States

  •  Loloah Mohammad Alselem    


The acquisition of economic institutions has become a global trend in recent periods, either through the transfer of all or part of the properties or shares. Such operations contribute to enhanced opportunities for economic expansion and growth. The Gulf States have not been away from these rising trends, with acquisitions taking a noticeable rise. This study analyses the impact of acquisitions on the financial performance of companies in the Gulf States based on the time sequence of data analysis for the duration between 2005-2018. The Empirical Bayesian and Ordinary Least Squares regression techniques are considered to demonstrate the acquisition impact on acquired non-financial companies in the Gulf States by using these major measures profitability, liquidity, and leverage. First and foremost, the study discovered that acquisition does not affect the profitability of the firm which formed into a new firm. But looking at the impact of the acquisition on leverage, the Interest Coverage ratio (COV) is been positively impacted by acquisition but the Debt to Equity ratio (ED) is not impacted by the acquisition. Additionally, the acquisition has a negative effect on a firm’s leverage. The outcomes of both OLS and the Bayesian have some variances, but the correspondence of the two results exceeds the difference. Thereby, it can be concluded that the Bayesian method is partially steady with the outcomes of OLS. The outcome of the study demonstrates that the financial performance of firms is not significantly affected by the acquisition.

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