This study analyses five mergers in the Indian banking sector to capture the returns to shareholders as a result of the merger announcements using the event study methodology (Brown and Warner, 1980, 1985; and MacKinlay, 1997). These are mergers of the Times Bank with the HDFC Bank, the Bank of Madura with the ICICI Bank, the ICICI Ltd. with the ICICI Bank, the Global Trust Bank with the Oriental Bank of Commerce, and the Bank of Punjab with the Centurion Bank. The Fama and Miller (1972) market model and Cox and Portes. (1998) twofactor model form the theoretical framework of this study. The aim is to understand the shareholder wealth effects of bank mergers. Using the single-factor model, the study finds that the average cumulative abnormal return (CAR) of the bidder banks is positive and substantial. These results are also statistically significant. Thus, the bidder banks got significant positive abnormal returns. The two-factor model results reveal that the merger announcement in the Indian private sector banks generated a positive and statistically significant CAR of 5.24 per cent, 7.83 per cent, and 8.59 per cent in a one-day, two-day, and three-day run-up window respectively to the shareholders of the bidder banks. The single-factor model finds that the combined CAR for all the target banks is positive, significant, and substantial. The combined CAR has been propped up due to very high CAR registered by the Bank of Madura. The bidder banks created a wealth of Rs 4,117.98 million in a one-day window (singlefactor model) as a result of the merger announcements. In the case of target banks, the shareholders of the Global Trust Bank and the Bank of Punjab appear to be the losers; they lost Rs 382.55 million in a one-day run-up window (single-factor model) and Rs 128.74 million in a one-day window (single-factor model) respectively. The Oriental Bank of Commerce and the Global Trust Bank combined lost 14.78 per cent in value on a weighted average basis in a 11-day period (-5, 5) window. This merger was the first major move to bail out a sick bank. The merger announcements in the Indian banking industry have positive and significant shareholder wealth effect both for bidder and target banks. The market value weighted CAR of the combined bank portfolio as a result of merger announcement is 4.29 per cent in a threeday period (-1, 1) window and 9.71 per cent in a 11-day period (-5, 5) event window.

The idea that business is a medium to deliver goods and services in lieu of profits is outmoded. The triple bottom line (profit, people and planet) approach is no longer a buzzword. It is a reality and a pressing need. There is no denying the fact that ‘corporate India’ too has embraced the philosophy of ‘doing well by doing good’. All appears hunky-dory when cash rich and highly profitable firms are hailed for being socially responsible organizations. However, at times, the situation may be ironical. An organization, seen as an epitome of altruism, is engaged in the manufacturing of a legal, albeit potentially harmful product. Any organization in the cigarette industry would fit this bill to perfection. Business schools globally have revisited their course curriculum with increased focus on sustainability. Varun Chopra, on his day one of the MBA induction programme, has been confronted with a fundamental question: why do organizations exist? The answer to the complex question has to be examined through the lens of different stakeholders. Is there a simple answer as the interests of different stakeholders may be divergent? Scouting for an answer to this question in the cigarette industry draws attention to the need to juxtapose economic, social and environmental objectives.

Not so long ago, ‘product recalls’ in the Indian automobile sector were a novelty. The defective vehicles were repaired as part of the after-sales service. In the absence of a strong regulatory framework, the manufacturers were under no obligation to proactively initiate product recalls. The introduction of a voluntary code on product recalls by the Society of Indian Automobile Manufacturers (SIAM) in 2012 and introduction/amendments in the existing legal regimen of the country in recent years have led companies to take more than just baby steps towards product recalls. Product recalls are a case of management failure. There is a need for gauging the impact of this failure on the stock price of the manufacturers, especially in the Indian context where the recall phenomenon is poised to gain further momentum. The event study methodology is a widely used approach to assess the impact of a particular event/announcement on the stock price. This methodology was used in the present study to gauge whether abnormal stock returns accrued to the manufacturers during 13 product recall announcements made in the Indian automobile sector between 1 January 2010 and 31 December 2015. The study found that product recall announcements generated small and statistically insignificant cumulative abnormal returns (CAR) of –0.02 per cent in the (–1, +1) event window, 0.92 per cent in the (–2, +2) event window and 1.70 per cent in the (–5, +5) event window. The study found no substantial or statistically significant difference in the CAR generated during big recalls and small recalls. Furthermore, the study found little evidence that CAR generated during recalls where defective component(s) in the vehicle were repaired is positive as compared to CAR generated when such component(s) were replaced.

The world faces the arduous task of reining in pollution.

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