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Firms Performance after Mergers and Acquisition in Indonesia

16 Pages Posted: 25 Sep 2013  

Mona R. Sidjabat

Universitas Indonesia, Graduate School of Management

Ruslan Prijadi

Universitas Indonesia, Graduate School of Management

Date Written: September 25, 2013

Abstract

Mergers and Acquisitions (M&A) involving firms in Southeast Asia, stand at its highest level since the 2008 financial crisis. Deals worth $105.4 billion have either been completed or are pending completion this year, an increase of more than 50% from the $68.6 billion last year. M&A also occurs in Indonesia due to preferable economic growth during the last decade.

Researchers attempt to reveal more explanation regarding the determinants of M&A success. Many of them even pose a doubt questioning if mergers really improves the firms' performance (Kumar, 2009). The objective is to reexamine the firms performance M&A in Indonesia and considering another important aspect of M&A, i.e., the chance of the firms to learn from their previous M&A decisions.

The results show that most firms have improved their profitability and liquidity after mergers, but not the operation efficiency. The research indicates preliminary sign of agency problem behind M&A decisions. The results cannot confirm the importance of previous M&A experience.

Keywords: Mergers and Acquisitions, Firms' Performance

JEL Classification: G34

Suggested Citation

Sidjabat, Mona R. and Prijadi, Ruslan, Firms Performance after Mergers and Acquisition in Indonesia (September 25, 2013). Universitas Indonesia, Graduate School of Management Research Paper No. 13-72. Available at SSRN: https://ssrn.com/abstract=2330695 or http://dx.doi.org/10.2139/ssrn.2330695

Mona Sidjabat (Contact Author)

Universitas Indonesia, Graduate School of Management ( email )

Depok, West Java 16424
Indonesia

Ruslan Prijadi

Universitas Indonesia, Graduate School of Management ( email )

Depok, West Java 16424
Indonesia

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