Mergers, taxation and accounting performance: Some evidence from Greece

Abstract

The study examines the merger effects on the accounting performance of Greek firms, in parallel with their taxation impact, during the period of economic crisis in Greece. The study analyses twelve accounting measures from financial statements and financial ratios of a sample of Greek listed firms in the Athens Exchange that carried out one merger in the period from 2010 to 2015 as acquirers. The results revealed that none of the twelve examined accounting measures have changed significantly due to the merger event, one year after the merger transaction. Different results are proposed regarding the impact of the type of industry, as the findings of the study indicate a better accounting performance for the constructions firms than the others from our sample. Furthermore, the study investigates the impact of the new Greek Income Tax Code (GITC) (Law 4172/2013) that refers to the corporate restructuring in Greece. There is evidence that there is some effect from the new GITC and it provides further opportunities for capital gains, not subject to tax from mergers, during the period of the economic crisis in Greece.

Intra-industry’ Effects from Mergers on Financial Statements, in and out of Technology-intensive Industries: Evidence from Greece

“…Similar conclusions have been drawn earlier studies based on stock market or accounting performance measures that supported no significant results after mergers per industry [13,16]. On the other hand, different conclusions that there is (a) an improvement at performance in different industry than technology-intensive industrial sector were found by Pazarskis et al [1], or (b) an improvement at performance of the technology-intensive industrial sector were found by Alexandrakis et al [22].…”

“…There is no significant change of the examined number of the quantitative variables. Similar conclusions with no significant results after mergers per industry have been drawn earlier studies examining several accounting performance measures for the commercial and services sector after mergers [1,13]. Finally, some other researchers concluded that there is a worsening in performance [16,22].…”

“…We observe that there is no statistically significant change after mergers in accounting performance of the merged firms in the primary sector. Pantelidis et al [13] argued also for similar results with no significant change after mergers per industry, as well as Pazarskis et al [1] have been drawn same conclusions for the commercial and services sector after mergers. Finally, some other researchers concluded that there is a worsening in performance after mergers in this sector [16,22].…”

“…Different conclusions have been drawn earlier studies based on accounting performance, which found a comparative better performance of the constructions sector: Pantelidis et al [21] in the beginning of the economic crisis found that return on total assets presents a significant change due to mergers events, which it signalizes a better performance among the acquiring firms in their examined sample period for the firms of the constructions industry. Also, Pazarskis et al [1] during the economic crisis claimed for a better performance after mergers of the constructions industry, as they found an improvement in five out of 12 examined financial ratios in their study. On the other hand, different conclusions were drawn before the outbreak of the economic crisis by Agorastos et al [16], as [19,20], as well as from several earlier studies for the Greek market and mergers before or during the economic crisis in Greece [1,16,21,22].…”

“…Merger is the action of unity from two or more firms under the control of one management. The merger eliminates one or more firms as independent legal entities and transfers their assets to a company that absorbs it [1]. The factors that may lead to mergers are market conditions, developments in new technologies, changes in government regulation, internationalization of markets, etc.…”