Impact of M&A Announcement on Stock Returns of Acquirer Companies: New Evidence from Indian Stock Market

Abstract

Abstract:Mergers and Acquisitions (M&As) are often used as preferred tools of corporate structuring to serve a variety of business objectives and add value for the shareholders. Earlier studies have triggered a number of questions regarding the impact of M&As for the shareholders of acquiring companies. This paper focuses on the M&A among Indian companies and the response of the Indian capital market to such attempts as reflected in the changes in the stock return for different window periods close the M&A announcement. The findings of the present study suggest that there is significant impact of M&A announcement on stock returns for almost half of the sample acquirer companies. The study offers evidence in support of the contention that Indian stock market is not efficient in the semi-strong form with respect to M&A announcement information for acquirer companies and emphasizes that investment analyst cannot ignore the information regarding the M&A deals.

Abnormal Returns in Corporate Action: The case of Indonesia and Taiwan

“…The idea is surely to increase the power in controlling the existing market. This study supported Chao and Ho [21], Vij [22], Boyson et al [23].…”

Grabbing hand or helping hand? Ownership interventions and acquirers returns; the role of provincial idiosyncrasies

“…The study's dependent variable is a short‐term acquisition returns measured by CAR3 (−1, +1) and CAR5 (−2, +2). Abnormal return is estimated using the market model event study after considering a 200 day‐period starting from −241 day and ending −41 day before the announcements as our estimation window (Song, Tippett, & Vivian, 2017; Vij, 2017). Our independent variable is intervention and defines as 1 if a particular month is part of the period surrounding the time when an ownership reform was released or otherwise 0, (see Section 4.1 for details).…”

“…Following M&A studies (Rashid & Naeem, 2017; Vij, 2017; Yang et al, 2019), the analysis in each of the regressions is first conducted using the ordinary least squares method with robust SEs . Thus, to test our hypothesis, our primary dependent variable is 3‐day cumulative abnormal returns (CAR3), and our regression technique is the OLS.…”