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Market Response to the Announcement of Mergers and Acquisitions: An Empirical Study from India

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  • Neelam Rani
  • Surendra S. Yadav
  • P.K. Jain

Abstract

The present article examines the short-run abnormal returns to India based mergers and acquisitions during 2003–2008 by using event study methodology. The present work is based on a sample of 623 mergers and acquisitions. We find that acquisitions by Indian companies significantly create short-term wealth on the announcement day to the shareholders of acquiring companies. Cumulative average abnormal return (CAAR) for Indian companies’ merger and acquisition activities is 2 per cent (significant at 1 per cent) over event window of 11 days (−5, +5). It seems the market perceives the merger and acquisition activities by Indian companies as efficiency enhancing. However, the results indicate presence of high event-induced variance in abnormal return. The present study reports a high event-induced variance in the abnormal return due to the announcement of mergers and acquisition in Indian context.

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  • Neelam Rani & Surendra S. Yadav & P.K. Jain, 2013. "Market Response to the Announcement of Mergers and Acquisitions: An Empirical Study from India," Vision, , vol. 17(1), pages 1-16, March.
    • Handle: RePEc:sae:vision:v:17:y:2013:i:1:p:1-16
    DOI: 10.1177/0972262912469558
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    Cited by:

    1. Neelam Rani & Aman Asija, 2017. "Has Financial Crisis Affected the Announcement Gains of Indian Cross-border Acquisitions?," IIM Kozhikode Society & Management Review, , vol. 6(1), pages 55-66, January.
    2. Mahesh Dahal & Joy Das, 2022. "Merger and Acquisition Announcement of Indian Banking Sector: A Pre-Post Analysis of Stock Market Reaction," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 14(2), pages 89-105, December.
    3. Priyanka Shah & Parvinder Arora, 2014. "M&A Announcements and Their Effect on Return to Shareholders: An Event Study," Accounting and Finance Research, Sciedu Press, vol. 3(2), pages 170-170, May.

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