How Mergers and Acquisition (M&A) Affect Firm Quality of Earnings

How Mergers and Acquisition (M&A) Affect Firm Quality of Earnings

It is not quite clear what the problem is exactly. OK. M&As become popular but what is the problem here? You need to review what a problem statement is and how such a statement is formulated. Use the material already uploaded on VLE.

You need to make clear what is the meaning of the term quality of earnings? You need to explain.

A quantitative approach is indeed appropriate. You need to dig into the literature (26.300 studies published so far) to see what analytical methods others, more experienced than you, have used in the past. 

Based on the feedback you received on Summative Essay 1, as well as the knowledge you received from Week 4&5, you will be submitting this week, the second summative essay that counts for the 20% of your overall grade. In order to successfully complete this task please read carefully the recommended readings from week 4 and 5. Please pay attention to the below instructions:

Based on the topic you have already chosen in the first summative assessment, as well as the problem and purpose statement you have already created and identified, this week you must be able to identify  the research questions that are relevant to your purpose of research, outline and discuss the data collection tool and identify possible analyses that can be adopted for your research study. 

Support your paper with minimum of five (5) resources. In addition to these specified resources, other appropriate scholarly resources, including older articles, may be included.

Length: 3 - 4 pages not including title and reference pages.

Your paper should reflect scholarly writing and APA Referencing standard. Be sure to adhere to  Academic Integrity Policy by avoiding plagiarism through text-citing and acknowledging other author's work.  

Problem Statement:

Globalization has influenced the competitiveness of competition at both the national and international levels, resulting in increased industrialization and the existence of a laissez-faire economy. Business competition is unavoidable for all businesses, until it forces them to come up with new approaches to uphold their presence and better the company financial performance to stay afloat in the marketplace and achieve company objectives, such as generating profits yearly. During market competition a company can engage in several things to continue to experience growth and development in the business. Business expansion as a business strategy is one of the developments that the company can make. A company can expand both internally and externally.

 Expansion internally can be accomplished by creating new departments, increasing the capacity of the plant and expanding its manufacturing unit. Mergers and acquisitions are common methods of external expansion used by most businesses. Gupta (2012) states that any organization's ultimate goals are continuous growth and survival, and M&A is one type of survival strategy.

In theory, Mergers and Acquisitions are not the same, the terms are used interchangeably. A merger occurs when two or more companies join to form a new entity, whereas an acquisition occurs when one company acquires another and runs its operations properly (Tanriverdi & Uysal, 2015). According to Rao & Kumar 2013, M&A can be described as activities that involve company acquisitions, reformation or control that alters the proprietorship structure of the company. M & A is a type of approach a business can use to tap into new sectors or markets (Malik, Melati, Khan, & Khan, 2014).

The goal of M&A in the short and long term is to achieve synergy while increasing economies of scale, scope, and financial strength (Mardianto, Christian, & Edi, 2018). Mergers and acquisitions that have an impact on the performance of the company and quality of earnings will be reflected in the financial statements. The financial performance of the two companies after the mergers and acquisitions can be seen and assessed as to whether the mergers and acquisitions were successful or not.

 M&A is a trending topic both in academic research and the business environs. Data shows from the Institute for Mergers, Acquisitions and Alliances (2021), that in the United States of America, there have been more than 325,000 mergers and acquisitions since 1985 with a known value of approximately 34,900 billion USD.  “In 2017, a new record has been broken in terms of number of deals with 15’100 which is a 12.2% increase over 2016” (Institute for Mergers, Acquisitions and Alliances, 2021). The growing number of mergers and acquisitions dealings shows that this approach is becoming more popular among businesses as a means of accelerating growth.