The profitability of acquiring companies listed on the Warsaw Stock Exchange
The profitability of acquiring companies listed on the Warsaw Stock Exchange

Summary/Abstract: The aim of the research presented in this article is to assess the impact of acquisitions on the profitability of the acquiring companies. The study was conducted on a sample of 439 companies listed on the Warsaw Stock Exchange. To ensure comparability of data, only companies that are not financial institutions or funds were analysed. The test sample included companies that made acquisitions in the period 2006–2011. The comparative sample was made up of companies with no takeover history. The study analysed the profitability of companies by analysing indicators such as return on equity, return on assets and the price-earnings ratio showing the prospective profitability of the companies. The analysis included the absolute values of profitability, and the relative changes in profitability in the three years following the acquisition. According to the results of the non-parametric Mann Whitney U test, there is no statistical evidence that median (average) profitability ratios are different in group of acquirers and group of non-acquires. The analyses based only on the descriptive statistics, i.e. ROE, ROA, P/E, and MV/BV means and medians, show that the synergy theory is not confirmed for the Polish capital market. The considerably lower financial results of the acquiring companies observed in the study tend to support the conclusion on the veracity of the theories of the hubris hypothesis and managerial overconfidence. This may mean that the acquisitions made by listed companies do not lead to increased value for their shareholders.

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