Short-Term Performance of Mergers and Acquisitions

Neelam Rani (), Surendra Singh Yadav () and Pramod Kumar Jain ()
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Neelam Rani: Indian Institute of Management Shillong
Surendra Singh Yadav: Indian Institute of Technology Delhi
Pramod Kumar Jain: Indian Institute of Technology Delhi

Chapter Chapter 3 in Mergers and Acquisitions, 2016, pp 37-108 from Springer

Abstract: Abstract Mergers and acquisitions (M&A) are one of the mechanisms by which firms gain access to new resources; via resource redeployment, they increase revenues and reduce cost. Stock market reactionsMarket reaction to mergers and acquisitions announcements could help to predict mergers and acquisitionsMergers and acquisitions (M&A) profitability. The present chapter attempts to examine the market response associated with mergers and acquisitions announcementsAnnouncement using event study methodologyEvent study methodology . The effects of these announcements appear to be a good indicator of future success. The empiricalEmpirical research presents evidence that the market, usually, reacts positively to the M&A announcements that are not contaminated by any other contemporaneous firm-specific announcements. The study finds evidence that shareholdersShareholders of acquiring Indian companies engaging in mergers and acquisitions experience a statistically significant positive abnormal returnAbnormal returns on announcement day as well as statistically cumulative abnormal returns over multiday event windowsEvent window . The empirical findings suggest that mergers and acquisitions result in wealthWealth creation for shareholders of the Indian acquirers.

Keywords: Event study; Earn-outs; Cross-border acquisitions; Abnormal returns; Shareholders; Short-run performance; India; Event study; Cumulative abnormal return; Shareholders wealth effect; Domestic acquisitions; Emerging market multinational (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isbchp:978-981-10-2203-6_3

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DOI: 10.1007/978-981-10-2203-6_3

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