The Application of Two-Stage Approach in Evaluating Domestic Mergers and Acquisitions Performance Efficiency in Egypt

Abstract

The main aim of this research is to measure the impact of domestic Mergers and Acquisitions (M&As) on firm's performance and to determine M&As success and failure factors (i.e. weight efficiency, difference in efficiency, return on assets and return on equity) in the whole Egyptian market. The researchers used two-stage analysis; Data Envelopment Analysis (DEA) in the first step and censored regression technique (Tobit model) in the second step for sample of 21 firms listed in the Egyptian stock market (EGX) for 23 operations within the period from 2003 to 2015. The research found that there is enhancement in performance efficiency post M&As in both financial and non-financial sectors. The results showed significant relationship between both ROA and ROE with M&As performance efficiency indicating that these two factors are the most success factors affecting M&As performance efficiency. Results found that there is insignificant relationship between difference in efficiency and M&As performance efficiency.