Econometric Assessment of the Impact of the Buyer Company’s Financial Position on the M&A Effectiveness (in the Pharmaceutical Industry)

2020 ◽  
Vol 2020 (1) ◽  
pp. 62-80
Author(s):  
Mariya Shtefan ◽  
Viktoriya Shubina
Keyword(s):  
Pharmaceutical Industry ◽  
Growth Rates ◽  
Abnormal Return ◽  
Econometric Model ◽  
Cumulative Abnormal Return ◽  
Financial Leverage ◽  
Financial Position ◽  
Net Profit ◽  
The Impact ◽  
Econometric Assessment

This article provides the assessment of the impact of the buyer company’s financial position on the M&A effectiveness on the base of the pharmaceutical industry. We have estimated this correlation using OLS method and data for the period from 2005 to 2017. As a result, the hypothesis about the dependence of the M&A efficiency from the buyer company’s financial state has been confirmed. The developed econometric model have showed that more than 80% of variation of the cumulative abnormal return, received as a result of the transaction, is explained by growth rates of revenues and net profit, assets, current liquidity, autonomy and financial leverage, return of sales and assets at the transaction time.

scholarly journals Can Rumor Clarification Eliminate the Effects of Rumors?

2020 ◽  
Vol 11 (1) ◽  
pp. 48-62 ◽  
Author(s):  
Peinan Ji ◽  
Xiangbin Yan ◽  
Guang Yu
Keyword(s):  
Stock Returns ◽  
Event Study ◽  
Abnormal Return ◽  
Listed Companies ◽  
Cumulative Abnormal Return ◽  
Negative Sample ◽  
The Impact

This article analyzes the effects of rumor and official rumor clarification on Chinese stock returns under different rumor conditions using an event study. The results are based on a sample of 832 rumor clarification announcements from China Listed Companies spanning the period of 2015 to 2017. The results show that the average cumulative abnormal return after the rumor event is significantly positive in the positive rumor sample and neutral sample, and significantly negative in the negative rumor sample. After the clarification announcements, we find the announcements effective for the positive and neutral rumor sample, but not in the case of the negative sample. However, by comparing different clarification times of each sample, we find that the earlier the clarification time is, the smaller the impact on the companies in positive and negative rumor examples.

scholarly journals Impact of Acquisitions on Financial Performance of Selected Software Companies in India

2019 ◽  
Vol 8 (9) ◽  
pp. 2415-2419
Keyword(s):  
Null Hypothesis ◽  
Statistical Significance ◽  
Critical Value ◽  
Strategic Partnership ◽  
Return On Assets ◽  
Financial Status ◽  
Financial Position ◽  
Software Companies ◽  
Net Profit ◽  
The Impact

The objective of the study is to examine the impact of Acquisitions on financial status of selected software companies in India. This study is based on Infosys, Panaya, CMC and TCS companies. It also estimates the pre and post-acquisition financial position of companies using financial parameters like Earning per share, Dividend per share, Return on Assets and Net Profit Margin. The period of study is for 6 years which is divided into 3 years for pre-acquisition and 3 years for post-acquisition performance. The data of Acquisitions has collected based on the financial parameters, Paired T-test has used for finding the statistical significance effect and to estimate their performance on merged companies. As the critical value is greater than the calculated value i.e. -2.919>-6.679, Rejected the Null hypothesis, i.e. there is a major difference between performance of pre and post merger as per earning per share. As the calculated value is greater than critical value i.e. 3.64 >2.919, accepted the Null hypothesis, i.e. there is no major difference in the Earning per Share. The terminal goal behind acquisition is to achieve growth in business. A well-analysed and the authentic plan will dramatically improve the chances of getting new implements to be in a competitive world. The strategic partnership of TCS-CMC and INFOSYS- PANAYA will provide few guidance for traditional players.

scholarly journals Impact of Financial Leverage on Profitability of Reliance Industries LTD

2021 ◽  
Vol 2 (5) ◽  
pp. 15-22
Author(s):  
Priyanka Meghanathi ◽  
Alok Chakrawal
Keyword(s):  
Significant Relationship ◽  
Oil And Gas ◽  
Financial Statement ◽  
Regression Result ◽  
Financial Leverage ◽  
Return On Equity ◽  
Net Profit ◽  
The Impact ◽  
The Relationship ◽  
Oil And Gas Sector

Oil and gas sector is among the eight core industries in India and plays a major role in influencing decision making for all the other important sections of the economy. The main purpose of the study is to examine the impact of financial leverage on the profitability of reliance industries ltd. The study verifies two hypotheses first is There is no significant relationship between financial leverage with Profitability and Second one There is no significant impact of financial leverage on profitability of Reliance Industries Ltd during the study period. Financial leverage is taken as independent variable and Net Profit Ratio (NPR), Earning per share (EPS), Return on Equity (ROE) and Return on Asset (ROA) are taken as dependent variable. The data collected over period of 2016-17 to 2020-21 regarding financial leverage and profitability from annual consolidated financial statement of Reliance Industries Ltd. Correlation is used to know the relationship between financial leverage with Profitability. Linear regression is used to examine the impact of leverage on profitability. The results showed that there is no significant relationship between financial leverage with NPR and significant positive relationship between financial leverage with EPS, ROE and ROA. Regression result shows that there is no significant impact of leverage on profitability of reliance industries ltd during the study period.

scholarly journals Impacts of Seaport Investment on the Economic Growth

2016 ◽  
Vol 28 (4) ◽  
pp. 365-370 ◽  
Author(s):  
Tahar Ammar Jouili ◽  
Mohamed Anis Allouche
Keyword(s):  
Economic Growth ◽  
Production Function ◽  
Growth Rates ◽  
Econometric Model ◽  
Public Investment ◽  
Economic Sectors ◽  
The Public ◽  
Economic Growth Rates ◽  
The Impact ◽  
Douglas Production Function

The aim of this paper is to estimate the impact of seaports investment on the economic growth. Seaports are seen by many governments as an important factor in the strengthening of the economies. During the last two decades, the Tunisian succeeding governments have been allocating a great amount of money to develop seaport infrastructures. However, the Tunisian economy witnessed fluctuations in the economic growth rates and decrease in the rate of employment during the same period of time. This study used an econometric model by employing the Cobb-Douglas production function. The sample was composed of Tunisia's economic sectors (manufacturing, services and agriculture) over the period 1983-2011. The results of the study show that the public investment in seaport infrastructures has apositive influence on Tunisian economic growth. The study also revealed that the biggest beneficiary from the seaport investment infrastructure is the service sector. This paper aims to estimate the impact of seaports investment on the economic growth. The seaports are seen by many governments as an important factor in the strengthening of the economies. During the last two decades, the Tunisian succeeding governments were allocating a great amount of money to develop seaports' infrastructures. However, the Tunisian economy witnessed fluctuating in the economic growth rates and decreased in the rate of employment during the same period of time. This study used an econometric model by employing the Cobb-Douglas production function. The sample composed of Tunisia's economic sectors (manufacturing, services and agriculture) over the period 1983-2011. The results of the study show that the public investment in seaports' infrastructures has a positive influence on Tunisian economic growth. The study also revealed that the biggest beneficiary from the seaports investment infrastructure is the services sector.

Determinants of Cumulative Abnormal Return: A Dynamic Approach

GIS Business ◽  
2017 ◽  
Vol 12 (3) ◽  
pp. 33-41
Author(s):  
Kuchal Jubna
Keyword(s):  
Significant Relationship ◽  
Abnormal Return ◽  
Large Body ◽  
Cumulative Abnormal Return ◽  
Dividend Yield ◽  
Dynamic Approach ◽  
Market Conditions ◽  
Dynamic Relationship ◽  
The Impact

There is a large body of finance literature that has tested and validated dividend policy decisions mainly focused on the effect of the dividend announcement and the impact it has on the post announcement drift. But very few studies have tested the determinants of the cumulative abnormal return (CAR) surrounding the dividend announcement and to find the role of economic adversity in explaining the change in CAR. The present study investigates the role of change in dividend under both adverse and favorable market conditions. Using the data of S&P CNX 500 companies the study examines the role of dividend yield and EPS in explaining cumulative abnormal return over a period of seven years. Using VAR methodology the study examined the determinants of CAR surrounding the dividend announcement and the dynamic relationship between the variables. The results of the study showed that during adversity, dividend yield is the major factor explaining CAR. Variables like EPS, volume and price explain the CAR when there is no economic adversity. The study found that there is a significant relationship between abnormal return and its determinants.

scholarly journals The impact of tax optimization on the picture of the financial position of enterprises

2019 ◽  
Vol 2019 (103 (159)) ◽  
pp. 9-22
Author(s):  
Adam Adamczyk
Keyword(s):  
Income Tax ◽  
Corporate Income Tax ◽  
Original Research ◽  
Analysis Method ◽  
Tax Rate ◽  
Financial Position ◽  
Net Profit ◽  
Original Contribution ◽  
Reduced Rate ◽  
The Impact

The paper discusses the impact of tax optimization in the area of corporate income tax on the picture of the company's financial position. The purpose of the article is to answer the question whether the introduction of a preferential, reduced rate of corporate income tax for small taxpayers affected the dynamics of revenues from sales and financial results presented by enterprises. The study used the histogram analysis method and U Mann-Whitney's non-parametric test for independent trials. The article confirmed the thesis that the application of a preferential tax rate with a simultaneous rigid revenue criterion resulted in a reduction in the dynamics of sales revenues in the research sample entities. At the same time, it was proved that despite the decrease in sales revenue, the net profit of entities using the preferential rate was improved. The original contribution of the work is the application of the original research methodology.

scholarly journals Pengaruh Political Connection terhadap Cumulative Abnormal Return dan Trading Volume Activity pada Pemilihan Presiden 2019

2021 ◽  
Vol 1 (1) ◽  
pp. 83-95
Author(s):  
Eldam Pradana ◽  
◽  
Sudrajat Sudrajat ◽  
Pigo Nauli ◽  
Yuliansyah Yuliansyah ◽  
...  
Keyword(s):  
Abnormal Return ◽  
Trading Volume ◽  
Quantitative Methods ◽  
General Election ◽  
Political Connection ◽  
Cumulative Abnormal Return ◽  
Volume Activity ◽  
Significant Difference ◽  
Before And After ◽  
The Impact

Abstract Purpose: This study aimed to identify the impact of Political Connection on Cumulative Abnormal Return (CAR) and Trading Volume Activity (TVA) for companies that associate with political figures in the presidential election of 2019. Research methodology: This study used quantitative methods, with a population of 25 companies on the Indonesian stock exchange, through daily stock prices. Result: This investigation showed no significant difference in the Cumulative Abnormal Return between before and after the announcement of the Constitutional Court. Then, there was no significance value on Trading Volume Activity and Cumulative Abnormal Return between before and after the announcement of General Election Commissions. Limitations: In this study, the limitation is observation time which is only 36 days. The number of samples is limited, which only 25 companies with the scope of research of companies that have affiliations with the winners of the 2019 general election. Contribution: This research implicates companies affiliated with politics. This is in the 2019 general election against the winners of the general election in 2019.

MODERN PROBLEMS OF ACCOUNTING AND ANALYTICAL ENSURING FINANCIAL RESULTS MANAGEMENT

2020 ◽  
Author(s):  
Yuliia Peniak ◽  
◽  
Nataliia Horokhovatska ◽  
Keyword(s):  
Performance Management ◽  
Enterprise Management ◽  
Goods And Services ◽  
Financial Condition ◽  
General Evaluation ◽  
Net Profit ◽  
Business Entities ◽  
Results Management ◽  
Main Components ◽  
The Impact

The main purpose of any enterprise in the market economy is to obtain high financial results. One of the main conditions for the effective functioning of the enterprise is ability to generate profit in the amount that will create the financial basis for further development and expansion of the enterprise, comply with social and material needs, ensure competitiveness in the market of goods and services. The need for accounting and analytical management of financial results stems from needs of owners, the state and employees in information that will enable them to identify patterns and trends in financial results, identify and assess the main factors influencing the process of their creation, distribution and usage, identify reserves and thus increase the level of profitability. Despite the significant scientific contribution in the field of research of financial results of the enterprises, the issue of improvement aims to the accounting and analytical maintenance of management of financial results of the enterprise remains actual. That is why the purpose of the study is to substantiate the theoretical and practical aspects and develop approaches to improving the mechanism of formation of accounting and analytical support for the management of financial results of the enterprise. Accounting and analytical management of financial results of the enterprise is a set of interconnected elements of production and management system, activities carried out by the subject of management, creation of a certain structure, as well as collection, accumulation, storage and analysis of information necessary for effective operation of the enterprise. The main components of the study of accounting and analytical support of financial performance management are the formation of methods of analysis, control and forecasting of financial results, which requires specification of the components of the analytical and controlled process within the organizational and information model. Namely, the formation of reliable information about the financial condition of the enterprise, the analysis of economic indicators of the enterprise is of great importance in the system of general evaluation of business entities. Their research makes it possible to assess the dynamics of the structure of income and expenses, to determine the impact of factors on the company's profit from various activities, as well as to find reserves to increase the net profit of enterprises. Thus, the improvement of accounting and analytical support of enterprise management is based on the use of modern forms, methods and principles that place new demands on the formation of unbiased, complete, timely, clear and useful accounting and analytical information about the enterprise and its financial results.

The economic consequences of voluntary environmental reporting on shareholder wealth

2006 ◽  
Vol 3 (2) ◽  
pp. 1 ◽  
Author(s):  
Ruslaina Yusoff ◽  
Shariful Amran Abd Rahman ◽  
Wan Nazihah Wan Mohamed
Keyword(s):  
Abnormal Return ◽  
Listed Companies ◽  
Shareholder Wealth ◽  
Environmental Information ◽  
Economic Consequences ◽  
Share Price ◽  
Cumulative Abnormal Return ◽  
Environmental Reporting ◽  
Financial Report ◽  
Significant Difference

This study was carried out to examine the economic consequences ofvoluntary environmental reporting on shareholders' wealth among Malaysian Listed Companies that voluntarily disclosed environmental information in their financial report. One hundred andfifty two (152) companies of Bursa Malaysia (MSE) had been identified as a sample in the current study. Seventy six (76) companies were classified as environmental reporting companies while the remaining companies were classified as non-environmental reporting companies. The classification was done in order to determine the differences between share price, profitability and market equity for both types of companies. The study hypothesizes that voluntary environmental reporting leads to an improvement in the shareholders wealth. However, the results show that there is no significant difference between cumulative abnormal return for environmental and non-environmental reporting companies. Based on the results obtained, it can also be concluded that profitability and size of the companies do not have any significant roles in deciding whether or not to produce environmental reporting companies.

Sign in / Sign up

Export Citation Format

Share Document