Accounting earnings quality and merger & acquisition performance in South Africa
Date
2012-09-21
Authors
Govender, Avishkar
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Abstract
This paper examines the relationship between the quality of accountings earnings and long-run performance for South African acquirers in the context of market-to-book value classifications. Glamour acquirers show significant earnings momentum prior to acquisition; however this momentum is not sustainable. In the period after the acquisition glamour acquirers exhibit a decreasing earnings trend and it is found that South African value acquirers outperform value acquirer’s post-acquisition. This paper does not however identify the determinant of this phenomenon as the hypothesis that the pre-acquisition earnings momentum of glamour acquirers is in part bolstered by their aggressive investments is rejected.
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Keywords
Mergers and acquisitions, Performance, Earnings