This paper examines the operating performance of a sample of Egyptian companies involved in Mergers and Acquisitions (M&A) transactions for the period 1996 to 2003. The analysis is based on the accounting measures to test the effects of M&A on the corporate performance of the construction and technology sectors. The study tests two hypotheses: first, whether there have been significant improvements in corporate performance following the M&A event, and second, whether the industry sector has an impact on the corporate performance. Empirical results revealed that some measures of corporate performance like profitability, suggested statistically significant gains in the years following M&A, especially in the construction sector. Other performance measures such as efficiency, liquidity, solvency, and cash flow position do not show significant improvements after mergers in the short-run analysis in both the sectors. The paper concludes that mergers in the Egyptian technology sector do not lead to improved corporate performance in the short run. The findings of this study significantly contribute to the empirical literature on M&A in the emerging markets of Egypt.

The Egyptian economy has undergone a major transformation and structural changes have taken place during the past decade because of economic reforms introduced by the Egyptian government since 1991 in the wake of economic liberalization and globalization policies. In a liberalized era, `size' and `core competence' have become the focus of every business. Consequently, this required companies to grow and expand in promising businesses. Leading companies have undertaken a massive re-engineering exercise to create a formidable presence in their core areas of activity. M&A is the dominant approach used by companies to recoup with emerging market conditions, since it is considered as one of the most effective approaches of corporate restructuring and has become an integral part of the long-term business strategy. M&A activity has its impact on various diverse groups of stakeholders and, therefore, it is not surprising that it has attracted the attention of academic research.

A considerable amount of studies—most of it in the developed capital markets of Europe, Australia, UK and the US—have been carried out to cover a wide spectrum of M&A aspects, such as the role of M&A in resources allocation, the effects of M&A on shareholders' wealth, and the effects of M&A on corporate performance. Mergers and acquisitions, as a new paradigm in Egypt, has not received much attention in research. Hitherto, to the best of our knowledge, there is no comprehensive study in Egypt that has examined the various aspects of M&A and its impact on post-merger corporate performance, especially after the government regulations of M&A came into effect in 1996. Therefore, this study can be considered as the first that tests the impact of M&A on corporate performance in Egypt.

This study differs from those discussed in prior literature (for example, Lian-Sun and Tang, 2000; Ghosh, 2001; Scott and Jeannette, 2001; Heron and Lie, 2002; Yeh and Hoshino, 2002; Gugler et al., 2003; Ramaswamy and Waegelein, 2003; Fee and Thomas, 2004; King et al., 2004; Feroz et al., 2005; Choi and Harmatuck, 2006; and Mantravadi and Reddy, 2008) in several points: first, it covers a new ground as it discusses the impact of M&A on corporate performance in the emerging market of Egypt; second, it employs a wide spectrum of ratios categories that comprises 26 ratios measuring performance aspects of profitability, efficiency, liquidity, solvency and cash flow position.

Business Strategy Journal, Post-Merger Corporate Performance, Mergers and Acquisitions Transactions, Egyptian Technology Sector, Economic Reforms, Egyptian Companies, Financial Accounting Standards Board, Conglomerate Acquisition, Data Envelopment Analysis, Construction Sectors, Data Analysis.