The Impact of Acquisitions on Corporate Performance Results During the Period of Economic Slowdown: Case of Lithuania

An extensive scientific debate in various countries is inspired over the economic consequences of corporate acquisitions which are executed using different strategies and under different economic conditions. However there is a lack of researches that evaluate corporate acquisitions using different valuation techniques in Lithuania. Therefore in this paper, the impact of corporate acquisitions on profitability ratios and economic value added of the Lithuanian companies during the period of economic slowdown is evaluated. The research sample includes Lithuanian companies, listed at the NASDAQ OMX Vilnius Stock Exchange, which acquired at least one company during the period of 2008 – 2010. The impact of acquisitions is estimated by profitability ratios and economic value added. The research results evidence that both profitability ratios and economic value added decrease during short-term after an acquisition in majority cases. However the recovery can be observed during the last quarter, indicating that acquisitions are beneficial during the economic slowdown.