Performance implications of corporate merger and acquisition announcements in the Indian context

Abstract

The present research efforts aim to cast light on the connection that exists between mergers and newlineacquisitions announcement information and the stock prices of Indian financial service firms newlinelisted on the Bombay Stock Exchange. The current novel research is conducted on 140 Indian newlinefinancial service companies between the years 2011 and 2020. newlineand#61623; The investigation examines Tobinand#39;s q distribution for the financial service sector of the newlineIndian economy. The results suggest that stock markets react significantly to the valuation newline newline107 newline newlineof Indian firms due to Mandamp;A announcements in the category of non-banking financial newlinecompanies. newlineand#61623; More specifically, 40 companies have a high Tobin s q ratio in the full sample of firms. newlineAccording to the findings, the majority of Mandamp;A announcements did not affect Tobinand#39;s q of newlinethe sampling companies. This indicates that the stocks of companies operating in the newlinefinancial services sector are not affected by news of mergers and acquisitions. It newlinedemonstrates that the Indian capital market responded normally to information on mergers newlineand acquisitions. newlineand#61623; The methodology of the event study is utilized to examine the effects of merger and newlineacquisition announcement information on abnormal return generation of companies. The newlinestudy indicates that the announcement information of mergers and acquisitions does not newlineinfluence the returns of the Indian financial service sector firms. newlineand#61623; More specifically, most of the stock market returns are positive due to the normal behavior newlineof Indian capital markets. Out of the total 140 Mandamp;A announcements, 109 announcements newlinedid not affect the abnormal returns of the sample firms because information leakage was newlinenoticed prior to two years of announcements. newline