IMPACT OF MERGERS OF CZECH COMPANIES ON THEIR PROFITABILITY AND RETURNS

The aim of this paper is to assess whether mergers of companies in the Czech Republic affect the profitability and returns of merged companies in the period of three years after the merger. The analysis is based on the sample of over 300 Czech companies implementing mergers in 2001 – 2010. This sample was created using data from the Trade Bulletin and Trade Register of the Czech Republic. The analysis used basic statistical tests verifying the statistical significance of the particular explored indicators of merging and merged companies three years after the merger in relation to the same indicators at the moment of merger. The explored indicators were net earnings after taxes (EAT), return on assets (ROA) and return on equities (ROE). The period of three years after the merger was chosen due to the reduced influence of some accounting methods requiring revaluation or exclusion of some assets from the balance sheet of the merged company.