Studies that compare post-merger accounting profitability with the pre-merger accounting profitability of the companies involved show little consistency.This is because: it to the companies' performance prior to merging.The problem here is separating
The effects of the merger from the multitude of other factors that influence
Companies' performance over time.returns fails to provide conclusive evidence on the performance outcomes of mergers and acquisition is that:
A)The identification problem: it is difficult to distinguish the effects of mergers from the many other factors that influence profitability
B)The effects of mergers on profitability are diverse
C)Both (a)and (b)
D)Neither (a)nor (b)-we do not know why studies of the effects of mergers on firm performance have been s inconclusive

Question

Quizplus · Accepted Answer

Studies comparing post-merger accounting profitability with pre-merger accounting profitability face the identification problem, which makes it difficult to distinguish the effects of mergers from the many other factors that influence profitability. Additionally, the effects of mergers on profitability can be diverse, leading to inconsistent results. Therefore, both (a) and (b) are the reasons why studies fail to provide conclusive evidence on the performance outcomes of mergers and acquisitions.

Studies That Compare Post-Merger Accounting Profitability with the Pre-Merger Accounting