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Short-Term Performance of Mergers and Acquisitions

In: Mergers and Acquisitions

Author

Listed:
  • Neelam Rani

    (Indian Institute of Management Shillong)

  • Surendra Singh Yadav

    (Indian Institute of Technology Delhi)

  • Pramod Kumar Jain

    (Indian Institute of Technology Delhi)

Abstract

Mergers and acquisitions (M&A) are one of the mechanisms by which firms gain access to new resources; via resource redeployment, they increase revenues and reduce cost. Stock market reactionsMarket reaction to mergers and acquisitions announcements could help to predict mergers and acquisitionsMergers and acquisitions (M&A) profitability. The present chapter attempts to examine the market response associated with mergers and acquisitions announcementsAnnouncement using event study methodologyEvent study methodology . The effects of these announcements appear to be a good indicator of future success. The empiricalEmpirical research presents evidence that the market, usually, reacts positively to the M&A announcements that are not contaminated by any other contemporaneous firm-specific announcements. The study finds evidence that shareholdersShareholders of acquiring Indian companies engaging in mergers and acquisitions experience a statistically significant positive abnormal returnAbnormal returns on announcement day as well as statistically cumulative abnormal returns over multiday event windowsEvent window . The empirical findings suggest that mergers and acquisitions result in wealthWealth creation for shareholders of the Indian acquirers.

Suggested Citation

  • Neelam Rani & Surendra Singh Yadav & Pramod Kumar Jain, 2016. "Short-Term Performance of Mergers and Acquisitions," India Studies in Business and Economics, in: Mergers and Acquisitions, chapter 0, pages 37-108, Springer.
    • Handle: RePEc:spr:isbchp:978-981-10-2203-6_3
    DOI: 10.1007/978-981-10-2203-6_3
    as

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