Horizontal Mergers and Corporate Performance: Evidence from Ghana Revenue Authority (GRA)

Horizontal Mergers and Acquisitions (M&A) have been extensively used by firms as vehicles for growth and competitiveness strengthening within the context of the global economy. Restructuring of government has been a constant theme over the last three decades and revenue administration has not been completely immune to this trend. It is in this spirit that Ghana in 2009 merged all her revenue agencies into a Revenue Authority under Ghana Revenue Authority Act (Act 791) known as the GRA. The GRA has been seen by many as a possible solution to critical problems, such as poor revenue performance, low rates of compliance, ineffective staff, corruption etc. However, since the formation of GRA in 2009, no comprehensive assessment has been made of the Authority that exist today and of how well it has served its intended purpose. The objective of this research therefore is to determine the effect of the merger on the overall corporate performance of the GRA by compiling and ranking the perceptions of GRA management and employees on the improvements in the sixteen (16) key reform areas and also explore the extent to which the perceived improvements have translated into total volume of revenue mobilized post-merger. The study used total yearly revenue and GDP figures for the period of 2005 to 2014. The data was further broken down into pre-merger (2005 - 2009) and post-merger (2010 – 2014) periods. Integration of tax reform, provision of momentum for change and increase tax revenue were ranked top three in terms of best-improved areas. The revenue – to – GDP ratio analysis also revealed that even though both revenue and GDP grew positively post-merger, the revenue growth rate was slower than that of the GDP. The results of the t – test and F – test indicates that there is significant difference between the pre and post-merger revenues and hence concludes that the merger has had a great impact on the corporate performance of the GRA. The study however recommends that, the GRA be strengthened by resourcing it with the requisite manpower, infrastructure and technology to enable it function better. Ghanaians should be educated on the relevance of payment of tax and stiffer punishments should be handed to tax defaulters. Government must check corruption and work towards creating a congenial economic atmosphere for industrial units to generate more revenue.