Effects of target firm's inventory turnover on post-merger and acquisition performance

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Firms use merger and acquisition (M&A) as a strategic tool to restructure their business. We explore the factors that determine the success of M&A in manufacturing. The literature has highlighted financial variables as success factors. However the literatures have not considered how operational factors of target firm have effects on the post-M&A performance of the buyer firm. Thus, we hypothesise that operational factors of the target firm also affect the M&A performance. In particular, we look into three different types of inventory, i.e., raw material, work-in-process, and finished goods, simultaneously. Then, we put forth that the turnover of the target firm's work-in-process inventory, which directly reflects its operational efficiency, is the most important factor. Thus, we conclude that in addition to financial factors, the target firm's operational efficiency determines the M&A performance. We elaborate on the analysis results and discuss economic as well as managerial implications. © 2018 Inderscience Enterprises Ltd.
Publisher
Inderscience Enterprises Ltd.
Issue Date
2018
Language
English
Article Type
Article
Citation

International Journal of Applied Management Science, v.10, no.3, pp.173 - 191

ISSN
1755-8913
DOI
10.1504/IJAMS.2018.093800
URI
http://hdl.handle.net/10203/248800
Appears in Collection
MT-Journal Papers(저널논문)
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