Mergers and Acquisitions and Firm Performance in Zimbabwe

Abstract

Mergers and Acquisitions (M&A) are one of the most important corporate growth strategy actions being used by companies the world over. Zimbabwe has not been left out. As such, this dissertation sought to investigate the impact of M&A on the performance of ZSE listed companies from 2004 to 2012 using panel data (pooled OLS regression) methodology. A sample of 14 listed non-financial sector firms was used. The data was grouped into two samples; the full sample that consisted all the 14 companies and the M&A sample that consisted only those companies within the full sample which had experienced M&A activity within the period under review. For the dependent variables, this dissertation used ROA and ROE as measures of firm‟s financial performance while the independent variables were merger, firm age, firm size, leverage, risk (for the respective measures of performance), tangibility and liquidity. The results revealed no significant effect of M&A on firm performance. However, firm performance was positively and significantly affected by firm age, firm size, and liquidity. Tangibility had a negative and significant effect on firm performance. Risk was significant in explaining firm performance but had either a positive or negative impact on firm performance. The findings of this dissertation were limited and only applicable to the non-financial sectors of Zimbabwe.