Impact of Acquisitions on the Financial Performance of the Acquiring Companies in Kenya: A Case Study of Listed Acquiring Firms at the Nairobi Securities Exchange
Journal of Finance and Accounting
Volume 2, Issue 5, September 2014, Pages: 108-115
Received: Oct. 26, 2014; Accepted: Nov. 13, 2014; Published: Nov. 18, 2014
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Authors
George Gitonga Inoti, Faculty of Commerce, Department of Accounting, Finance & Management Science, Egerton University, Nakuru, Kenya
Samuel Owino Onyuma, Department of Economics & Business Studies, Laikipia University, Nyahururu, Kenya
Monicah Wanjiru Muiru, Faculty of Commerce, Department of Accounting, Finance & Management Science, Egerton University, Nakuru, Kenya
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Abstract
This study sought to determine whether acquisitions enhance corporate financial performance. The general objective of the study was to assess the effects of acquisitions on the financial performance of the acquiring companies in Kenya. The specific objectives of the study were; to determine the effect of acquisitions on the profitability of the acquiring company and to determine the effect of acquisitions on asset utilization of the acquiring company. Purposive sampling procedure was used to select a sample of all the acquisitions involving listed acquiring companies. Three years pre and post-acquisition financial statements of the acquiring company were examined. Key financial ratios were computed and used to determine the company’s pre and post-acquisition financial performance. Paired t-test was used to determine whether there was significant difference between the means of the two periods for each ratio. From the findings it was apparent that there was no significant difference in pre and post-acquisition ratios measuring profitability and asset utilization. The study therefore concluded that corporate acquisitions do not affect the financial performance of the acquiring company.
Keywords
Acquisitions, Financial Performance, Nairobi Securities Exchange
To cite this article
George Gitonga Inoti, Samuel Owino Onyuma, Monicah Wanjiru Muiru, Impact of Acquisitions on the Financial Performance of the Acquiring Companies in Kenya: A Case Study of Listed Acquiring Firms at the Nairobi Securities Exchange, Journal of Finance and Accounting. Vol. 2, No. 5, 2014, pp. 108-115. doi: 10.11648/j.jfa.20140205.12
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