Economic Liberalisation and Financing Pattern of Indian Acquiring Firms Abroad

P.L. Beena ()
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P.L. Beena: Institute for Studies in Industrial Development, New Delhi

Transnational Corporations Review, 2011, vol. 3, issue 2, 76-86

Abstract: Recent policy shift related to trade liberalisation and deregulation of foreign investment policy at the global level has, probably, been the main determinants in the emergence of new patterns such as internationalisation of the production process. The study argues that it is not because the Indian acquiring firms were flush with a surplus of funds that they went in for acquisitions overseas. Instead, they have made use of new financial innovative products such as Foreign Currency Convertible Bonds, Foreign Currency Exchangeable Bonds and Special Purpose Vehicles, Private equity, Venture capital in order to acquire large-sized firms abroad. The effective tax rate paid by these acquiring firms has significantly declined while these firms were excelling in terms of profitability. The average foreign exchange spending by these firms is much higher than the average foreign exchange earnings which are quite disturbing if we consider the interest of the country. Regulation by the state through measures of corporate governance is important in order to create conditions for growth and development in the domestic economy.

Keywords: FDI & M&As; Capital and Ownership Structure; Corporate Governance (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:oul:tncr09:v:3:y:2011:i:2:p:76-86

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