Emerging Market Bidder Returns and the Choice of Payment Method in Mergers and Acquisitions: Evidence from India

Radha M. Ladkani and Ashok Banerjee

Journal of Emerging Market Finance, 2018, vol. 17, issue 3, 386-411

Abstract: Consistent with other evidence on short-run effects of mergers and acquisitions (M&A) announcements on acquiring firm’s shareholder wealth in emerging markets, our study reveals that M&A deals in India, irrespective of the payment method, are not value destroying. Cash deals and stock deals create shareholder wealth on deal announcements. We offer ‘pseudo-cash deal hypothesis’ to explain this phenomenon. We also observe that bigger the relative size of the deal, greater is the abnormal return on deal announcements. We observe that acquirers with high promoter holdings are highly reluctant to offer stock when they acquire a majority stake. However, bigger deals, deals for listed target firms, and deals in the information technology sector, command stock offers. JEL Classification: G34, G14

Keywords: Mergers and acquisitions; payment method; bidder returns; promoter holdings; emerging markets (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0972652718797817 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:emffin:v:17:y:2018:i:3:p:386-411

DOI: 10.1177/0972652718797817

Access Statistics for this article

More articles in Journal of Emerging Market Finance from Institute for Financial Management and Research
Bibliographic data for series maintained by SAGE Publications ().