Mergers and Acquisitions in Selected Frontier Markets of Asia

Manwani

2018

JES

Self Cite

This paper aims to provide comparative information on mergers & acquisition activities in the banking sector of Pakistan. This study used accounting ratios to analyze the financial performance of banks in Pakistan after merger and acquisitions. The study utilized secondary data which were taken from Thomson Financial Services Worldwide M&A database, financial statements of bank's corporate website and Pakistan stock exchange. In this study, financials for eleven years (2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016) were analyzed by using ratios. In spite of certain limitations, accounting ratios are still reflected as an easy and reliable analytical tool. Ratio analysis, being a time-tested method, is most frequently employed in all financial decision-making processes. The results show that the financial performance of banking sector of Pakistan in the capacities of profitability, and leverage, has been quite satisfactory before the merger deal. It means that merger deal fails to improve the financial performance of the bank, and banks merge with other small or equal size banks only to capture market share, to open Islamic window, for cost-cutting, to create synergy, to gain efficient resources and to unlock hidden values.

Section: Discussionsupporting

confidence: 90%

Merger & acquisition strategy for growth, improved performance and survival in the financial sector

Manwani

2018

JES

Self Cite

“…The degree of protection that investors receive in various jurisdictions depends on the characteristics of the legal rules themselves and the quality of legal enforcement (Kothari et al 2012;La Porta et al 1997). Due to their weak legal and enforcement environment around shareholders' interests, emerging and frontier markets may not sufficiently protect shareholders' interests (Ahmed et al 2018;Ma et al 2009). In a separate legal enforcement study, La Porta et al (2002) and note that countries governed by civil laws provide investors with weaker legal rights, 5 as civil law tends to be associated with lower financial development levels.…”

Section: Legal Enforcementmentioning

confidence: 99%

Earnings Management in Frontier Market: Do Institutional Settings Matter?

2021

We analyse whether differences in earnings management practices in frontier countries can be explained by institutional settings, considering their diverse corporate governance environments, legal regimes, and accounting standards. Across 22 frontier market countries from 2000–2017, we find that financial disclosure, legal environments, and the number of analysts following to be correlated with reduced levels of earnings management (EM). The impact of wealth, GDP growth, firm size, and the use of Big-4 auditors were also associated with reduced EM. Contrary to developed markets and novel to this study, higher levels of societal trust failed to show significance in its ability to constrain EM, suggesting informal institutions are less influential as control monitors. Findings herein verify that the factors that moderate EM are not universally applicable, and help highlight international differences in the management of earnings.

“…Besides merger, the other strategy such as acquisition of Islamic business units of full-fledged Islamic banks also can be do. Ahmed, Ahmed, & Kanwal (2018) said that the merger and acquisition activity will increase the performance of the companies in the market. But, the merger in the market could deteriorate the competitive process (Ahamed, 2012).…”

Section: Resultsmentioning

confidence: 99%

Spin-off, market structure, and deposit funds: case in the Indonesian Islamic banking industry

Arif

2018

EJEM

The regulator has imposed some Islamic business units to do the spin-off after the enactment of the Islamic banking act (The Act No. 21 of 2008). This paper examines the relationship between spin-off, market structure, and deposit funds. It uses panel data regression for analysis. The result shows that there is a difference in deposit funds between the spin-off banks and non-spin-off banks. The result also indicates that there is a relationship between spin-off, market structure, and deposit funds in the Indonesian Islamic banking industry. It implies that the regulator should a policy to accelerate the Indonesian Islamic banking industry.