This study provides evidence of positive abnormal returns earned by shareholders of acquirers upon merger and acquisition (M&A) announcements on African markets. We observed significant cumulative abnormal returns for wider windows up to 25 days before and after M&A announcements. Confidentiality about pending merger announcements is poorly held, resulting in significant information leakage occurring up to six trading days. Further, we establish that firm industry, mode of payment, and nature of acquisition significantly influence abnormal returns. Finally, the paper found strong positive effect of firm‐specific factors (firm size and return on equity) on investor's investment decisions following a merger announcement.

This study examines the impact of executive compensation on firm performance after successful mergers and acquisitions (M&A) in Africa between 2005 and 2016. Using accounting and financial performance measures and controlling for firm, deal and corporate governance factors, we show that executive compensation induced by M&A in Africa negatively affect the performance of listed firms. There is also evidence to support the impact of firm size, deal size, target destination, foreign ownership, diversification, outside board representation and executive ownership on the pay‐performance nexus. Besides, corporate governance factors in Africa, generally, worsen firm performance, especially for cash and total pay.

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