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Please use this identifier to cite or link to this item: http://repository.iitr.ac.in/handle/123456789/9411
Title: Corporate mergers and financial performance: a new assessment of Indian cases
Authors: Srinivasa Reddy K.
Nangia V.K.
Agrawal, Rajat
Published in: Nankai Business Review International
Abstract: Purpose – It is worth mentioning that mergers and acquisitions (M&As) have become a popular vehicle for emerging-markets firms to rapidly access new opportunities and market capabilities. Indeed, privatization and multi-nationalization have given a greater shore up in raising global and domestic merger deals. Motivated by these factors, the purpose of this paper is to investigate “do mergers produce abnormal returns around the announcement; conversely, do they improve financial performance in the long-run?” Design/methodology/approach – The study applies earnings management approach (event study) to compute average abnormal returns (AAR) around the merger announcement for select Indian M&A cases. Further, accounting ratios are considered to assess the long-run financial performance. Thereafter, t-stat is applied for testing the proposed hypotheses. In particular, it has performed a later test to the means of financial ratios and variables for both services and manufacturing sectors in accounting ratios and cylinder models, respectively. Findings – The select Indian M&A cases show superior performance during the post-merger period for both manufacturing and services sectors, and observe a balance sheet improvement in the long-run. Research limitations/implications –Sample is one of the limitations to the study. Due to small sample of merger cases, this paper has limited scope to generalize the results. Hence, academic researchers may employ the suggested assessment (cylinder)-models on a large sample. Practical implications – The research work would help financial analysts, stockbrokers, M&A advisory and regulatory bodies while designing takeover and open offer policies. Originality/value – This is an original contribution, which has developed new assessment (cylinder)-models to examine the post-merger long-run financial performance of acquiring firms, especially sector-wise evaluation. © 2013, © Emerald Group Publishing Limited.
Citation: Nankai Business Review International (2013), 4(2): 107-129
URI: https://doi.org/10.1108/20408741311323326
http://repository.iitr.ac.in/handle/123456789/9411
Issue Date: 2013
Publisher: Emerald Group Publishing Ltd.
Keywords: Accounting ratios
Acquisitions and mergers
Asian emerging markets
BRIC nations
Event study
Financial analysis
Financial modelling
Financial performance
ISSN: 20408749
Author Scopus IDs: 55601633800
57197373384
57209499374
Author Affiliations: Srinivasa Reddy, K., Department of Management Studies, Indian Institute of Technology Roorkee, Roorkee, India
Nangia, V.K., Department of Management Studies, Indian Institute of Technology Roorkee, Roorkee, India
Agrawal, R., Department of Management Studies, Indian Institute of Technology Roorkee, Roorkee, India
Corresponding Author: Srinivasa Reddy, K.; Department of Management Studies, Indian Institute of Technology RoorkeeIndia; email: srinuddm@iitr.ernet.in
Appears in Collections:Journal Publications [MS]

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