The impact of mergers and acquisitions on the financial performance of Ecobank Ghana Limited

Abstract

Purpose: The focus of the study was to investigate whether acquisition and merger as a tool of recapitalization improves Ecobank Ghana limited performance in the long run. This study precisely examined the effect of acquisition and merger on return on assets, return on capital employed, shareholders equity to total assets, debt to equity and total liabilities to total assets.

Methodology: The study adopted a descriptive research model with quantitative analysis. Financial ratios over a 12-year period (2006- 2018, excluding 2012) were extracted from financial statements of the bank. The inferential and descriptive statistics were employed for the data analysis. The hypothesis of the study was tested by employing the independent sample test. Also, the Levene’s test was employed to test for the variance homogeneity.

Findings: Results from the t-test for equality of means revealed that acquisition and merger had an insignificant relation with the return on equity, return on capital employed, shareholders equity to total assets, debt to equity and total liabilities to total asset.

Originality/Value: This paper seeks to add up to the existing empirical evidence on the impact of mergers and acquisitions on the financial performance of Ecobank Ghana Limited. The study further recommend that the processes involve in mergers should be strategically planned and executed not ignoring the valuation process.