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Analyzing determinants of value creation in domestic and cross border acquisitions in India

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  • Kohli, Reena
  • Mann, Bikram Jit Singh
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    Abstract

    The present study seeks to assess the acquiring company announcement gains, and determinants thereof, in domestic and cross border acquisitions in India. For this purpose, 268 acquisitions comprising of 202 cross border acquisitions and 66 domestic acquisitions constitute the sample set. Standard event study methodology has been employed for computing the announcement returns. Further, regression analysis has been conducted to assess the sources of wealth gains in domestic and cross border acquisition. The results of event study indicate that cross border acquisitions have created significantly higher wealth gains than the domestic ones. Further, the results of regression analysis highlight that cross border acquisitions, pursued by the acquiring companies in technology intensive sector, for the target companies also in technology intensive sector, create superior wealth gains. The reason being, such cross border acquisitions provide an opportunity to the acquiring company to combine and judiciously utilize intangible resources of both the companies on a broader scale across new geographies. Thus, the study contributes to the existing literature on internalization theory by extending it to an emerging market like India.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Business Review.

    Volume (Year): 21 (2012)
    Issue (Month): 6 ()
    Pages: 998-1016

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    Handle: RePEc:eee:iburev:v:21:y:2012:i:6:p:998-1016

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    Related research

    Keywords: Bid specific factors; Cross border acquisitions; Domestic acquisitions; India; Internalization; Market imperfections; Mergers and acquisitions;

    References

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    Cited by:
    1. Banerjee, Pradip & Banerjee, Prithviraj & De, Soumen & Jindra, Jan & Mukhopadhyay, Jayanta, 2014. "Acquisition pricing in India during 1995–2011: Have Indian acquirers really beaten the odds?," Journal of Banking & Finance, Elsevier, vol. 38(C), pages 14-30.

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