Comparison of Post-Merger performance of Acquiring Firms (India) involved in Domestic and Cross-border acquisitions
AbstractMergers and acquisitions are used for improving competitiveness of companies and gaining competitive advantage over other firms through gaining greater market share, broadening the portfolio to reduce business risk, entering new markets and geographies, and capitalising on economies of scale etc. India has emerged as one of the top countries with respect to merger and acquisition deals. Indian companies have been actively involved in mergers and acquisitions in India domestically as well as internationally. The value share of deals where India has been a target or an acquirer has risen sharply over the past decade, from $2.2 billion in 1998 to $62 billion in 2007. As India increases its participation in M&A deals, it is instructive to compare the domestic and cross-border acquisitions due to their distinctiveness. The distinction between them is a function of the change in market integration which changes the costs and benefit structure and also the difference in synergies – social, cultural and organisational. This research study was aimed to study the impact of mergers on the operating performance of acquiring firms by examining some pre- merger and post-merger financial ratios of these firms and to see the differences in the pre merger and post merger ratios of the firms that go for domestic acquisitions and the firms that go for the international/cross-border acquisitions. The results suggest that there are variations in terms of impact on performance following mergers, depending on the type of firm acquired – domestic or cross-border. In particular, mergers have had a positive effect on key financial ratios of firms acquiring domestic firms while a slightly negative impact on the firms acquiring cross-border firms.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 19274.
Date of creation: 10 Dec 2009
Date of revision:
Mergers and Acquisitions; Domestic Mergers; Cross-border Mergers; Operating performance;
Find related papers by JEL classification:
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- G3 - Financial Economics - - Corporate Finance and Governance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-12-19 (All new papers)
- NEP-COM-2009-12-19 (Industrial Competition)
- NEP-CWA-2009-12-19 (Central & Western Asia)
- NEP-IND-2009-12-19 (Industrial Organization)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Weston, J Fred & Mansinghka, Surendra K, 1971. "Tests of the Efficiency Performance of Conglomerate Firms," Journal of Finance, American Finance Association, American Finance Association, vol. 26(4), pages 919-36, September.
- Ghosh, Aloke, 2001. "Does operating performance really improve following corporate acquisitions?," Journal of Corporate Finance, Elsevier, Elsevier, vol. 7(2), pages 151-178, June.
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