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Acquisition pricing in India during 1995–2011: Have Indian acquirers really beaten the odds?

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  • Banerjee, Pradip
  • Banerjee, Prithviraj
  • De, Soumen
  • Jindra, Jan
  • Mukhopadhyay, Jayanta

Abstract

We examine the announcement returns of acquisitions made by Indian firms during the period 1995–2011. Our results confirm that the announcement returns to Indian acquirers are on average significantly positive. However, we are first to document that the announcement returns to Indian acquirers decline over time and become, on average, negative towards the end of our sample period. We analyze several hypotheses for such decline and find that the decline, while robust to a variety of explanations, is related to the intensity of the market for corporate control in India. Finally, the post-acquisition long-run returns for acquirers are, on average, consistently positive, do not change over time, and are unrelated to the initial market reaction to the acquisition announcement.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jbfina:v:38:y:2014:i:c:p:14-30
    DOI: 10.1016/j.jbankfin.2013.09.011
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    References listed on IDEAS

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    Cited by:

    1. Reddy, K. Srinivasa, 2015. "Institutional Laws, and Mergers and Acquisitions in India: A Review/Recommendation," MPRA Paper 63410, University Library of Munich, Germany, revised 2015.
    2. Aggarwal, Raj & Jindal, Varun & Seth, Rama, 2019. "Board diversity and firm performance: The role of business group affiliation," International Business Review, Elsevier, vol. 28(6), pages 1-1.
    3. Liu, Yong-Chin & Chen, Hsiang-Ju & Su, Ming-Chang, 2017. "Product market competition, type of mergers, and post-merger performance in Taiwan," Pacific-Basin Finance Journal, Elsevier, vol. 46(PB), pages 292-308.
    4. Jindal, Varun & Seth, Rama, 2019. "A new order of financing investments: Evidence from acquisitions by India’s listed firms," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 307-328.

    More about this item

    Keywords

    Mergers and acquisitions; India; Corporate governance; Market for corporate control;

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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