Creating shareholders' value utilising capital in post-merger and acquisition scenario: a study of Indian Telecom Industry

Abstract

Abstract:Whether a planned Mergers and Acquisitions (M&As) transaction will prove beneficial in future or not has been the issue of ongoing debate amongst corporate. The present study, thus, focuses on Indian Telecom Industry to analyse the acquirer firms' performance in creating shareholders value in the post-M&A scenario with respect to utilising capital before the M&A. This research paper studies the shareholders value effects of M&As in the Indian Telecom Industry that took place during the period of 2000-2001 to 2009-2010. Accounting-study methodology has been undertaken to study the shareholders value creation in the long-run post-M&A period. The results of the study show that the acquirer firms, before utilising capital for large-scale M&As as a part of their strategic decision process, do not rationally acknowledge whether the firms are capable of creating or rather protecting the shareholders' value in the post-M&A scenario.