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Towards understanding the merger-wave in the Indian corporate sector: A comparative perspective

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  • P.L. Beena

    (Centre for Development Studies)

Abstract

The corporate sector in India has witnessed a substantial growth of Mergers and Acquisitions (M&As) during the 1990s, facilitated by the policy-shift under Structural Adjustment Program. During the first wave (i.e., 1990-95), the Indian corporate houses seem to have been bracing up to face foreign competition while the second wave (i.e., 1995-2000) experienced a large presence of multinational firms. M&As also determined, to a large extent, the nature of foreign investment in the country during this period. A large share of these M&As were between firms belonging to the same business groups with a view to increase their respective controlling blocs in order to guard against a takeover. However, the study could not find any evidence of efficiency-related factors influencing M&As. It is rather growth of the firm in terms of their asset-size and market share that have been noticed. There are indications that one of the main motives could have been financial, that is, to increase the equity size, which can be further used to borrow resources for modernization. It is indeed a matter of grave concern that with the end of licensing policies, not even a reliable list of MNEs in India could be located from a publicly available source, not to speak of reliable information about their operations in the country. The behaviour pattern of Acquiring firms alerts us to the importance of working towards a desirable and workable competition policy and an appropriate corporate governance regime for the country. This is to be done keeping in view the need to develop productive capacities and generate employment within the country, providing for adequate `promotional measures' and safeguards to the small and medium entrepreneurs.

Suggested Citation

  • P.L. Beena, 2004. "Towards understanding the merger-wave in the Indian corporate sector: A comparative perspective," Centre for Development Studies, Trivendrum Working Papers 355, Centre for Development Studies, Trivendrum, India.
    • Handle: RePEc:ind:cdswpp:355
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    References listed on IDEAS

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    Cited by:

    1. Monika Mogla & Fulbag Singh, 2011. "Performance Comparison of Group vis-Ã -vis Non-Group Mergers," Vision, , vol. 15(1), pages 11-19, March.
    2. Neha Kalra & Shaveta Gupta & Rajesh Bagga, 2013. "A Wave of Mergers and Acquisitions: Are Indian Banks Going Up a Blind Alley?," Global Business Review, International Management Institute, vol. 14(2), pages 263-282, June.
    3. Adrian R. Gourlay & Geetha Ravishankar & Tom Weyman-Jones, 2006. "Non-Parametric Analysis of Efficiency Gains from Bank Mergers in India," Discussion Paper Series 2006_18, Department of Economics, Loughborough University, revised Oct 2006.
    4. Arpita Mehrotra & Arunaditya Sahay, 2018. "Systematic Review on Financial Performance of Mergers and Acquisitions in India," Vision, , vol. 22(2), pages 211-221, June.
    5. Jatinder Singh, 2011. "Inward Investment and Market Structure in an Open Developing Economy: A Case of India’s Manufacturing Sector," Journal of Economics and Behavioral Studies, AMH International, vol. 2(6), pages 286-297.
    6. Beena Saraswathy, 2010. "Cross-Border Mergers and Acquisations in India: Extent, Nature and Structure.July 2010," Working Papers id:3096, eSocialSciences.

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    More about this item

    Keywords

    Mergers and Acquistions; Competition policy; Corporate governance;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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