Merger and Acquisition Influencing the Financial Sector of Pakistan

Abstract

The motive of this study is to investigate the financial performance of banking sector in Pakistan in the post-merger and acquisition period by means of inspecting various rationale of merger and acquisition considering different theories and precursory empirical literature. Precisely, this study involves all the motives explained in the context of agency theory and theory of synergy. Banks engaged in the activity of merger and acquisition from past one decade (i.e., 2009-2019) were chosen having adequate information for five years pre- and post acquisitions. The concluding sample contains 3 banks chosen from population of 26. The empirical outcomes of agency theory reveal that the existence of empire building motives gives rise to underperformance of banks in the post-merger and acquisition time frame.