Effects Of Mergers And Acquisitions On Corporate Financial Performance In Cement Manufacturing Companies In Kenya

Abstract

This study aimed to investigate the effects of mergers and acquisitions (M&A) on the corporate financial performance of cement manufacturing companies in Kenya. It examined the effects of mergers and acquisitions on corporate financial performance in cement manufacturing companies in Kenya. The specific objectives were to establish the effect of financial indicators, cost synergies, market valuation, capital structure on corporate financial performance of cement manufacturing companies in Kenya. The theories that supported this study include agency theory, hubris hypothesis theory and Q-theory. It employed a quantitative research design using both primary and secondary data sources. Data collection involve questionnaires and financial records, focusing on three major cement firms involved in significant M&A activities between 1998 and 2020: Lafarge and Bamburi Cement, the Lafarge and Holcim merger, and National Cement and ARM Cement. The sample comprised 63 senior management personnel selected through a census survey method. This approach gathered firsthand experiences and perspectives from key decision-makers within the industry. Data collected was analyzed using SPSS version 28 and presented in form of frequencies, descriptive and inferential statistics which were used to derive conclusions. The study conducted a multiple regression analysis to determine the relationship between mergers and acquisitions and corporate financial performance. Statistical analysis using SPSS was conducted on both pre- and post-M&A financial statements to assess the impact on corporate financial performance. The findings were presented through tables and graphs, providing a visual representation of the study's results. Correlation results revealed that mergers and acquisitions affect corporate financial performance in cement manufacturing companies in Kenya. The results indicated that there was a positive and significant relationship between financial indicators, cost synergies, market valuation, capital structure and corporate financial performance in cement manufacturing companies in Kenya. The study recommends increased use of financial indicators, cost synergies, market valuation, debt and capital structure in mergers and acquisitions to ensure improved corporate financial performance.