Abstract:
This paper aims to investigate and evaluate the effect of pre- and post-mergers and
acquisitions (M&A) on non-financial Egyptian firms’ performance using a balanced
scorecard (BSC), as well as to empirically investigate the impact of M&A on share-
holder wealth using cumulative abnormal returns (CAR). The paper is limited to
non-financial firms listed on the Egyptian stock market (EGX) that have undergone
acquisition operations during the time specified in the paper from 2003 to 2016. Four
perspectives for the BSC are assessed before and after the acquisition operations to
evaluate performance. The final sample for the BSC appraisal is 12 companies for 12
acquisition operations, while the sample for shareholders’ wealth consists of 10 compa-
nies. The difference in the sample is that some companies became out-of-counter after
the M&A process. Cumulative differential analysis and graph observation show prefer-
able values for post-acquisition operations versus pre-acquisition operations for the
three non-financial perspectives, namely Customer satisfaction, Learning and growth,
and Internal business process, and for two financial perspectives, namely Sales and
Profitability. The results show preferable values for pre-acquisition operations for two
financial perspectives: Liquidity and Market value. The T-test results failed to estab-
lish a relationship between M&A and enhancing BSC perspectives. The results could
not find any evidence to support the impact of pre-post M&A on the shareholders’
wealth. The relationship between BSC before and after M&A and CAR is tested using
a multiple regression model. The results show a significant relationship only between
shareholder wealth and the Learning and growth perspective.
