Performance Analysis with DEA Application of Financial Holding Companies within In-market and Cross-market Mergers&Acquisitions
Date Issued
2015
Date
2015
Author(s)
Chang, Meng-Han
Abstract
The main purpose of this thesis is to evaluate efficiencies of financial holding companies in Taiwan when they attempt to merge other companies. We use Data Envelopment Analysis (DEA) to evaluate performance and try to compare performance of in-market mergers with cross-market mergers. Our empirical result shows that there are not difference between in-market and cross-market mergers. The performance of mergers and acquisitions depends on companies themselves, not the types of mergers. Besides, the inefficiency of in-market and cross-market mergers are both from pure technical efficiency. Moreover, we reclassify the samples into three groups. First group is those financial holding companies whose profits come from bank business most, second group is those financial holding companies whose profits come from insurance business most. Last group is those financial holding companies whose profits come from insurance. We find the first group has better efficiency than others apparently. The ratio of in-market mergers and cross-market mergers which were undertaken by the financial holding companies in first group is almost half and half. The result proves that the performance of mergers and acquisitions doesn’t depend on the types of mergers and acquisitions. In addition, when using DEA and financial ratios to evaluate the performance, the result is not consistent. The financial holding companies which have various business do better on financial ratios but have worse performance on efficiency. Conversely, the financial holding companies which have simple business do better on efficiency, but have worse performance on financial ratio.
Subjects
DEA
financial ratio
efficiency
financial holding companies
mergers
Type
thesis
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