Growth of firms, their improvement, efficiency and
profitability are cardinal benefits expected from mergers and acquisitions
(M&A). This research is an attempt to seek for the effects of mergers and
acquisitions on the performance of firms in the Ghanaian Stock Market from 2002
to 2012. The study was accounting based and used univariate analysis with
t-testing as well as panel data methodology for the analysis. The univariate
analysis revealed dwindling profitability after the merger for all the firms
with the t-test showing significant difference in profitability before and
after merger. The evidence from panel methodology indicates that M&A has significant
negative effect on the profitability of firms. It is therefore imperative that
M&As are properly planned, executed and evaluated. Specifically, efforts
should be made to attract and retain key personnel of the merged firms through
performance contracts or bonuses, proper conflict resolution measures should be
put in place and conscious effort made to reap the expected returns of the
merger. This is because gains from mergers and acquisitions do not just occur.
Additionally, our results indicate that risk and firm size have a considerable
effect on profitability of firms while debt capital and firm growth enhance
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