Merger Decisions, Accounting Information and Performance Stability inside and outside of economic crisis periods: Evidence from Greece

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This study examines the merger decisions from a sample of Greek listed companies in the economic crisis period and shortly after its end, by employing various quantitative and qualitative variables of mergers that signalize different levels of risk. The results revealed that the performance subsequent of mergers is not significantly different for the merged companies.

But in comparison to control sample of  more stable profitability and better performance for the companies with mergers. Furthermore, merger

events signalize different performance levels during and after the crisis: mergers that took place when there was no economic crisis are far more profitable and lead to better performance from mergers during the period of economic crisis. Last, regarding the industry relatedness of the merged firms, the industry type and the merger combination of merged companies, there is not any impact from them on the post-merger performance in the examined accounting measures. The study proposes for companies that during crisis periods maybe merger be the only way to survive and provide a stable profitability and accounting performance for shareholders.


Keywords: mergers, accounting measures, financial ratios, performance, economic crisis, Greece. 



Mergers and acquisitions are undoubtedly one of the most important ways for corporate restructuring worldwide (Hoshino, 1982; Healy et al., 1992; Golubov et al., 2013; Berrioategortua et al., 2018;

Grigorieva, 2020; Rodionov and Mikhalchuk, 2020). They are a common occurrence in several industries, geographical areas and time periods, while in some other cases they occur with less frequency and intensity (Mueller, 1980; Jensen and Ruback, 1983; Ramaswamy and Waegelein, 2003; Martynova and Renneboog, 2008; Harrison, 2005).


Their execution is associated with particular risks in relation to how they are implemented, due to the chosen business strategy and the characteristics of the merger by any company that wants to do a merger transaction (Lev and Mandelker, 1972; Amihud and Lev, 1981; Harford et al., 2009; Furfine and Rosen, 2011; Jandik and Lallemand, 2014; Harrison et al., 2014; Alhenawi and Krishnaswami, 2015). Merger decisions during periods of crisis are a special area of research to study, due to the current interest it presents nowadays (Rao-Nicholson and Salaber, 2013; Rao-Nicholson et al., 2016; Pantelidis et al., 2018; Pazarskis et al., 2021; Lois et al., 2021).

The macroeconomic environment affects directly the motives, but mainly plays an important role in the success of mergers, in any economy worldwide (Ibrahim and Raji, 2018). Over time, there have been a few studies that have examined the implementation of mergers in periods of economic crisis, but still there is a certain scarcity of studies. It is therefore of particular interest to implement a study that will investigate mergers during an economic crisis in any geographical area.

The worldwide economic crisis that began in 2008 in the United States has exacerbated on the next years the European debt issue. Following the European crisis, certain small European countries in the eurozone, particularly Greece, suffered terrible consequences. The Greek government used the ‘support mechanism’, which was established by the International Monetary Fund, the European Union, and the European Central Bank, in 2009 (Pantelidis et al., 2018; Pazarskis et al., 2021). The existence of the IMF within the Eurozone, on the other hand, is a first and provides unique challenges for all parties involved in this past transaction. In fact, this is the first time in the IMF’s history that the majority of its funds have been sent to a single country, an EU member state: Greece.

As a result, it is evident that examining the effects of the economic crisis on merger decisions in developed countries and EU members in the Eurozone that accept the provision of a ‘support mechanism’ is extremely fascinating.


As a result, Greek businesses of all sizes and industries were confronted with a slew of difficult financial issues and tried to employ every strategic solution to their problems (any potential form of corporate restructuring, including considering merger’s option). Thus, this study examines

empirically the implementation of mergers by companies in Greece during the recent economic crisis. or Peer Review Only in this country and after the recession of economic crisis.

More specifically, the business performance of all listed companies in the Athens Stock Exchange that made mergers for a recent period of five years (2014-2018) is investigated by analyzing the accounting measures and compared before and after the merger. In addition, sub-samples are created to examine the particular merger characteristics that are assessed with different aspects of managerial past decisions, and compared with the relevant literature. Also, mergers are evaluated periodically based on the time period in which they took place: during the crisis, after its end or without the existence of the economic crisis.


The contribution of the work is located in three issues. First, it contributes theoretically to the limited literature on mergers during period of crisis. Second, on a practical level, it can be a useful guide for those companies that want to make mergers in crisis periods. Finally, it provides a fresh look of the present situation for the Greek capital market where there are a few studies to capture the performance stability after mergers inside and outside of economic crisis periods.
Finally, the structure of the study is as follows: the following section presents the literature review, while the next section presents the research methodology and the examined sample with the various quantitative and qualitative variables. Then, are presented the results and in the last section,

the conclusions are stated.

1. Literature review
Mergers and acquisitions are a broad subject of research where different methodologies have been applied over time and are examined from different angles in accounting and finance (Jensen and Ruback, 1983; Manson et al., 1995; Netter et al., 2011; Karampatsas et al., 2014; Lebedev et al., 2014; Triantafyllopoulos and Mpourletidis, 2014; Sun et al., 2017; Dimopoulos and Sacchetto, 2017; Ibrahim and Raji, 2018; Tanna and Yousef, 2019; Tampakoudis & Anagnostopoulou, 2020;

Rodionov and Mikhalchuk, 2020). However, it is generally accepted that the ability of a researcher to express an opinion on a subject of study is a direct function of the fact that it is certified by an existing and reliable. Consequently, the methodology followed determines the prestige of his final achievement that he demonstrates methodology (Chatterjee and Meeks, 1996; Pazarskis et al., 2014).


Based on these assumptions, we can say that over time, various methodologies have been developed to capture the profitability of merger activities, through merger studies that periodically examine a sample of companies, whether or not there was a profit for the shareholders of the parties involved in
merger (Bruner, 2002; Meglio and Risberg, 2011; Golubov et al., 2013; Grigorieva, 2020).

Depending on the size of the sample of companies to be examined, the applied methodologies are divided into case studies and large sample studies that aim to draw a new or more general conclusion about the current business situation.
To begin with, the first case (case studies or clinical studies) examines a small number of examined companies (one or at most five companies) with different general methodologies (financial statements’ examination, event study, etc.), but there is the additional possibility of more detailed knowledge and evaluation with more careful study of the particular circumstances that led to them, in addition to financial and accounting historical data or personal individual considerations, which may lead us to in-depth conclusions and interpretations from those that had originally emerged, as
additional considerations are considered from a strategic and organizational point of view (Kaplan,
1989; Lys and Vincent, 1995; Ruback, 1983).

In the second case, it is considered a large number of companies examined and examined with various general methodologies. These ones can be summarized in three main categories: (i) surveys of executives, (ii) event studies, (iii) accounting studies. From these, the first two rely more on the objective observation and examination of real data and elements, while the third relies more on the acceptance and examination of the subjective perception of managers’ human characters. Finally, all of the above could also be combined (Mueller, 1980; Kumar, 1984; Healy et al., 1992; Golubov et
al., 2013; Grigorieva, 2020). Next, these three methods are described in details:

The methodology of surveys of executives is recommended and applied by examining senior business executives either through interviews or through questionnaires. In this case, the researcher must either be experienced enough to accurately diagnose the type of answers in a structured
interview conducted mainly with senior executives or to construct a questionnaire where he will receive explicit answers to the questions he asks without hesitation and beyond doubts of any kind, because many times the questionnaires are sent only in printed form and are not completed in the
presence of their author to provide the necessary clarifications. Then, whatever data emerges, is recorded, a statistical analysis is performed, from which the final results are derived (Bruner, 2002).
On the other hand, event studies employ as a methodology the assessment of the reaction of the share price from the announcement of various corporate events, and in our case the announcement of the merger event. In this category firstly the performance, before and after the merger, is recorded.
Then, the difference in the share prices of the companies is evaluated based on the previously expected performance, which would have been without the merger event. The difference between the actual and expected price indicates the magnitude of the change in the share price, and in other
words, it shows the positive or negative outperformance resulting from the announcement of the corporate event of the merger. Finally, since the early 1970s there has been a significant application and use of the business case study in many studies, despite objections to its weaknesses (Caves,
1989). The popularity of event studies that examine the effect of mergers on the share price of
companies involved in mergers has continued and is an important method of evaluating the success of mergers (Moeller et al., 2004; Fu et al., 2013; Rao-Nicholson and Salaber, 2013; Golubov et al., 2013; Hu et al., 2016; Tao F. et al., 2017; Young Chae et al., 2018; Zhang et al., 2018; Tampakoudis
et al., 2018; HaiYue et al., 2019; Cheng, 2019; Kyei-Mensah, 2019; Chen et al., 2020).

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