Synergy, Diversification and Firm Performance in Mergers and Acquisitions

DOI

10.2991/icoi-19.2019.1How to use a DOI?

Keywords

Merger, Acquisition, Synergy, Diversification, Firm Performance

Abstract

Synergy from merger and acquisition (M&A) theoretically increases firm performance. However, diversification leads to coinsurance effect which reduces firm value. This study aims to analyze the relationship between synergy and firm performance measured using return on assets (ROA) and Tobin’s Q, with diversification as moderating variable. Analysis was carried out using data from 33 M&A cases by non-financial firms listed in the Indonesia Stock Exchange, done between 2010 and 2016. Results show that synergy has a positive effect on both ROA and Tobin’s Q. Meanwhile, diversification moderates the impact of synergy towards both ROA and Tobin’s Q, thereby decreasing firm performance.

Copyright

© 2019, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Stanley Septian
AU  - Christiana Fara Dharmastuti
PY  - 2019/10
DA  - 2019/10
TI  - Synergy, Diversification and Firm Performance in Mergers and Acquisitions
BT  - Proceedings of the 2019 International Conference on Organizational Innovation (ICOI 2019)
PB  - Atlantis Press
SP  - 1
EP  - 5
SN  - 2352-5428
UR  - https://doi.org/10.2991/icoi-19.2019.1
DO  - 10.2991/icoi-19.2019.1
ID  - Septian2019/10
ER  -