Revisiting M&A performance in emerging market: the influence of new determinants (2008–2018)

Abstract

Purpose This study investigates the post-M&A operating performance of Moroccan acquirers. Considering both financial outcomes and key firm-level drivers, the study examines two potential economic determinants (i.e. Gross value added (GVA) and CapEx) that have not yet been explored in M&A literature. Design/methodology/approach We use a panel of 122 Moroccan acquirers covering the period from 2008 to 2018. Financial and governance data were collected from company reports and public filings. Operating cash flow (OCF) and OCF adjusted for changes in working capital requirements are used as a proxy for post-M&A performance. The study relies on Ordinary Least Squares regressions to estimate regression models and then a set of complementary parametric and non-parametric tests to check the robustness of our findings. Findings The results reveal a decline in the long-run performance of Moroccan acquirers. We noted a negative influence of CapEx and cross-border characteristics on the post-M&A performance. However, GVA, ownership concentration, firm-level governance and size show a positive effect. Robustness checks confirm the overall decline in performance, while demonstrating the sensitivity of these outcomes to the performance metrics used and firm-specific characteristics. Originality/value This research extends the literature on the operating performance of M&A by examining the effect of two new economic determinants (GVA and CapEx). It offers evidence from an under-researched emerging market context (i.e. Morocco). The timeframe of the study (2008–2018) witnessed an unprecedented surge in M&A deals in Morocco, and captures the evolution of governance practices following the introduction of Morocco's first code of corporate governance in 2008. Findings offer insights for boards, investors and regulators.