Impact on Shareholders Wealth in M&A Episode
| | |Abstract | |The Indian economy has undergone a major transformation and structural change during the past decade or so as a result of economic reforms | |introduced by the Government of India since 1991 in the wake of policy of economic liberalization and globalization. In this liberalized | |era, size and "core competence" have become the focus of every business enterprise. Naturally, this requires companies to grow and expand in| |businesses that they understand well. Thus, leading corporate houses have undertaken a massive restructuring exercise to create a formidable| |presence in their core areas of interest. Mergers and acquisitions (M&As) is one of the most effective methods of corporate restructuring | |and has, therefore, become an integral part of the long-term business strategy of corporate. | |The M&A activity has its impact on various diverse groups such as corporate management, shareholders and investors, investment bankers, | |regulators, stock markets, customers, government and taxation authorities, and society at large. Therefore, it is not surprising that it has| |received considerable attention at the hands of researchers world over. A number of studies have been carried out abroad especially in the | |developed capital markets of Europe, Australia, Hong Kong, and US. These studies have largely focused on different aspects, viz., (a) the | |rationale of M&As, (b) allocational and redistribution role of M&As, (c) effect of takeovers on shareholders' wealth, (d) corporate | |financial performance, etc. Some studies have also been carried out to predict corporate takeovers using financial ratios. M&As, being a new| |phenomenon in India, has not received much attention of researchers. In fact, no comprehensive study has been undertaken to examine various | |aspects especially after the Takeover Code came into being in1997. This study has been undertaken to fill this gap. | |Until upto a couple of year‘s back, the news that Indian companies having acquired American-European entities was very rare. However, this | |scenario has taken a sudden U turn. Nowadays, news of Indian Companies acquiring foreign businesses are more common than other way round. | |Objectives of the Project | |To explore the insights of a corporate event named ―Amalgamation which is a major event by itself and it drags lot of attention and results | |into many drastic changes in market valuations of a firm. | |( To study the impact of ―Amalgamation on price and volume before and after it takes place. | |( To verify existence of the abnormality in price and volume of the share as announcement of ―Mergers & Acquisition. | |( To analyze the bearing of such abnormality (if it does exists) on the Market Capitalization and Volumes traded on the stock market a month| |before and a month after the ―Amalgamation takes place for all the scripts under study. | |( To measure the cumulative impact of ―Amalgamation event and try to conceive a general trend based on it. | |The study is constrained to the amalgamation announcements during the years 2007 to 2009. The data have been collected for all publicly | |listed companies who announced their amalgamation plans in this specific time period. Out...
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