The Impact of Merger on the Performance of Jordanian Insurance Companies

Abstract

The study aimed at identifying the impact of the merger transactions that occurred in the Jordanian insurance market in the period of 1985-1989 on the operating and financial performance of merging companies. The study used annual data on 24 insurance companies that merged into 12 firms to test the different merger hypotheses, which assume operating and financial improvements as a result of merger. Using T and F (one-way ANOVA) tests, this study, as well as most other merger studies, did not find many positive effects of merger on merged firms. The specific findings of this study, however, are improved productivity, measured as employee's share of nit income, at a moderate significance level (0.076) and negative significant changes in operating activities concerning accounts receivable (I, e., Lower turnover and longer collection period). Most other ratios studied (debt capacity, profitability and miscellaneous performance indicators) have changed positively but not in a significant way.