Effect of Merger and Acquisition on Firm’s Control in the Banking Industry
Effect of Merger and Acquisition on Firm’s Control in the Banking Industry

Summary/Abstract: This study investigated the effect of merger and acquisition on firm’s control in the Nigerian banking industry, specifically examined the effect of shareholders fund on the cost efficiency in the Nigerian banking industry pre- and post- merger and acquisition; evaluated the effect of return on equity on the cost efficiency in the Nigerian banking industry pre- and post- merger and acquisition and assessed the effect of market share on the cost efficiency in the Nigerian banking industry pre- and post- merger and acquisition. The time series data on shareholders fund, return on equity, market share and cost efficiency were sourced and obtained from the Annual Financial Statement of Banks Accounts over a period of thirty (30) years from 2001–2020 for the selected banks. The study applied Panel data analysis estimation technique. The result of the study showed that shareholders fund has a positive effect on cost efficiency of the selected banks both before and after M&A, however it has a higher effect before M&A than after M&A. Similarly, return on asset has a positive effect on cost efficiency of the selected banks both before and after M&A, however it has a higher effect before M&A than after M&A. Further, market share has positive effect on cost efficiency of the selected banks both before and after M&A, however it has a higher effect after M&A than before M&A. hence, merger and acquisition does promote cost efficiency of the selected bank compared to the periods before acquisition. The study concluded that merger and acquisition does promote cost efficiency of the selected bank compared to the periods before acquisition in Nigeria. Therefore, banks intending to merge should thoroughly consider the effect of such merger on their cost control so as to achieve greater cost control after merger and acquisitions than before acquisitions.

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