An Empirical Study of the Short Run Performance of Mergers and Acquisitions in India

Authors

  • Suman Monga, Dr. Amanpreet

Keywords:

mergers, acquisitions, cumulative abnormal return

Abstract

This paper examines forty mergers and acquisitions in the Indian business sector to determine the returns to shareholders as a result of the merger announcements using the event study approach. The time period for the study is 2009-10 to 2017-18.. The present study also  includes a detailed and comparative examination of the nationality of the target firm, Controlling Interest, and Industry relatedness of the firms.  It is revealed by the study that cumulative abnormal returns do not sustain for longer time. Short term windows have been proved more beneficial when a comparison is made between varied sizes windows in respect of providing returns to an investor. So, it is major implication of the study that time element plays major role in share market. Cross-border acquisitions offer significantly better returns than domestic acquisitions. Furthermore, cumulative abnormal returns (CARs) for cross-border acquisitions are permanent, but they are temporary for domestic acquisitions. Complete purchases of the target company as a wholly-owned subsidiary provide significantly larger returns than partial/majority control acquisitions. When compared to intra-sector acquisitions, the announcement of inter-sector acquisitions yields higher profits

Downloads

Published

2022-01-26