An empirical investigation of the effects of merger and acquisitions on market and financial performance of publicly listed banks in the Philippines from 1999 to 2008: When two become one


Alger C. Tang

Date of Publication


Document Type

Master's Thesis

Degree Name

Master of Science in Accountancy

Subject Categories



Ramon V. Del Rosario College of Business



Thesis Adviser

Florenz C. Tugas

Defense Panel Chair

Rodiel C. Ferrer

Defense Panel Member

Herminigilda E. Salendrez
Katherine U. Sobremonte


The Philippine financial sector has experienced increased merger activity in the 1990s as well as in the early 2000s (BSP, 2000). This was partly due to increased incentives provided for by regulatory bodies for mergers in the said industry. Recently, the BSP has further improved the incentive system for mergers in order to encourage further consolidation in the industry. The BSP believes that merger and acquisition activities shall result in stronger players in the market that will help stabilize the financial industry of the country. However, the benefits of mergers and acquisitions on firm performance are not that evident. Mixed results were obtained from past studies about the effect of mergers and acquisitions on firm performance. This study examined mergers and acquisitions from 1999 to 2008 in the Philippine financial industry and its effect on firm performance using both market-based returns (measured by cumulative abnormal stock returns) and accounting-based returns (measured by return on asset and equity as well as abnormal return on asset and equity adopted from the framework of Ball and Brown in 1968). Results in this study indicated that acquiring banks generally experience a decline in their abnormal stock returns for up to six months after merger announcement. Furthermore, these banks also reported decreased returns on asset and equity for a period of up to five years. However, abnormal financial returns on asset and equity only marginally decreased for a period of three years and were not substantially different from pre-merger values for a period of five years. Panel regression shows increasing financial performance, measured by return on asset, return on equity, abnormal return on asset and abnormal return on equity over time after the merger, indicating possible accrual of synergistic benefits from the merger as indicated in the efficiency theory.

Abstract Format






Accession Number


Shelf Location

Archives, The Learning Commons, 12F Henry Sy Sr. Hall

Physical Description

xii, 139 leaves ; illustrations (some color) ; 28 cm. ; 1 computer optical disc ; 4 3/4 inches


Finance--Philippines; Banks and banking--Philippines

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