OPERATIONAL OUTCOMES OF MERGERS AND ACQUISITIONS: EVIDENCE FROM PSX-LISTED FIRMS

Abstract

This research investigates the long-term operational impact of mergers and acquisitions on acquiring companies listed on the Pakistan Stock Exchange, focusing on deals completed between 2010 and 2022. By selecting this timeframe, the study ensures that a sufficient post-merger period is available to properly assess changes in firm performance. Financial data from eight quarters before and after each transaction is analyzed using a basic pre-post comparison method to observe shifts in operational efficiency and profitability. Unlike prior studies in the Pakistani context, which have often emphasized short-term financial results or stock market reactions, this study specifically concentrates on long-term operational transformations. It fills a gap by offering insight into how acquiring firms perform operationally over an extended period after the merger. The findings indicate that while mergers and acquisitions conducted by PSX-listed firms during the selected period resulted in modest and limited improvements in profitability, they showed somewhat clearer gains in asset utilization efficiency. Overall, the operational outcomes were not uniformly strong across all firms or indicators, suggesting that M&A outcomes in Pakistan’s emerging market setting are mixed and require careful strategic planning. This research contributes valuable knowledge to corporate decision-makers, investors, and policymakers by shedding light on the operational consequences of M&A activities, which are often assumed to be beneficial but, in practice, yield variable outcomes.