In strategic management, one of the corporate level strategies is the mergers and acquisitions strategy (M&A). The main aims of this strategy are to create value and maximize the shareholder's wealth. Managers acquire companies mostly to create synergy.
We examine the post-acquisition performance of target firms using a sample of 57 acquisitions between Iran public industrial firms completed in the period of 1983 to 1997 through non-parametric techniques of Friedman and T-Student. Our approaches are to use accounting basis and event study to directly test for changes in operating performance. We used industry-adjusted measures to control for events in economy and industry that unrelated to mergers and acquisitions. Using the data of the target firms is one of the main advantages of our approach relative to other research.
The results indicate that acquired firms haven't improved in sales growth, asset productivity, and return on equity relative to their industries after acquisitions. Also results indicate that operating cash flows of acquired firms have significant improvements. The empirical results indicate that value isn't created in Iranian target firms