The profitability of legal mergers in times of economic crisis : a Polish example

Research background: Recent years have brought a serious economic crisis, first caused by the COVID-19 pandemic and later worsened by the Russian invasion of Ukraine. The global economy was greatly affected by these events, so it can be expected to see them affect the post-merger financial performance of companies. Purpose: The aim of the paper is to examine if the pandemic and the Russian invasion of Ukraine had any effect on the financial performance of combined companies during these events in comparison to merged companies for which the 3-year post-merger period ended in 2019. Research methodology: The research methods used involve a critical literature analysis and statistical tests. This study analyses the financial ratios of Polish public companies which participated in legal mergers which were finalised between 2016 and 2018. For each company necessary ROA ratios were calculated (pre-merger ROA ratio, ROA ratio for the 3rd year after the merger). The data was grouped according to the year of the merger and then compared to test the hypotheses. Results: There was no statistically significant difference in the distribution of profitability ratios for the analysed companies before and during the crisis. However, there is evidence that there was a statistically significant increase in profitability ratios pre- and post-merger for legal mergers finalised in 2017. Novelty: The paper provides an initial insight into how the latest economic crisis affected the financial performance of Polish public companies after a legal merger.