Shareholder Wealth Effects from Mergers and Acquisitions in the Indian Industry

Dr. Bisma Afzal Shah .


In today’s globalised economy, mergers and acquisitions are being increasingly used all over the world for improving competitiveness of companies through gaining greater market share, broadening the portfolio to reduce business risk, for entering new markets and, and capitalising on economies of scale. The present paper examines the impact of mergers and acquisitions on the shareholders’ wealth of the various companies which have undergone merger or an acquisition across different sectors in India. The objective of the study is to investigate whether there is any significant difference in the performance of the firms pre-merger/acquisition and post-merger/acquisition periods. By using the ratio analysis approach, a change in the financial position of the companies during the period 2004-2009 has been calculated. The data has been collected from Centre for Monitoring Indian Economy. A paired sample t-test is adopted to check for any statistically significant difference between the means pre and post the deals. Besides, a regression analysis has been done to test the relationship between the dependent variable and the independent variable. The findings conclude that there are no significant differences between the pre-merger/acquisition and post-merger periods/acquisition and hence, on an average, total shareholder value is not really affected by the announcement of M&A.


Mergers and Acquisitions, Shareholders Wealth, Business risk

Full Text:



Azhagaiah, R., & Kumar, T. S. (2011). Corporate Restructuring and Firms' Performance: An Empirical Analysis of Selected Firms across Corporate Sectors in India. Interdisciplinary Journal of Research in Business, 1(4), 58-82.

Beena, P. L. (2000). An analysis of mergers in the private corporate sector in India. Working Paper no. 301, Centre for Development Studies, Thiruvanthapuram, Kerala, India.

Feroz, E. H., Kim, S., & Raab, R. (2005). Performance measurement in corporate governance: do mergers improve managerial performance in the post-merger period? Review of Accounting and Finance, 4(3), 86-100.

Gallet, C. A. (1996). Mergers and market power in the US steel industry. Applied Economics Letters, 3(4), 221-223.

Healy, P. M., Palepu, K. G., & Ruback, R. S. (1992). Does corporate performance improve after mergers? Journal of financial economics, 31(2), 135-175.

Houston, J. F., & Ryngaert, M. D. (1994). The overall gains from large bank mergers. Journal of Banking & Finance, 18(6), 1155-1176.

Lowinski, F., Schiereck, D., & Thomas, T. W. (2004). The effect of cross-border acquisitions on shareholder wealth - evidence from Switzerland. Review of Quantitative Finance and Accounting, 22(4), 315-330.

Manasakis, C. (2006). Shareholder wealth effects from mergers and acquisitions in the Greek banking industry. International Journal of Banking, Accounting and Finance, 1(3), 242-256.

Mantravadi, D. P., & Reddy, A. V. (2008). Post-merger performance of acquiring firms from different industries in India.

Marina, M., Oosting, S., & Renneboog, L. (2007). The Long-term Operating Performance of European Acquisitions' (No. 137, pp. 1-40). Working Paper.

Moeller, S. B., Schlingemann, F. P., & Stulz, R. M. (2004). Firm size and the gains from acquisitions. Journal of financial economics, 73(2), 201-228.

Norman, G., & Pepall, L. (2000). Profitable mergers in a Cournot model of spatial competition. Southern Economic Journal, 667-681.

Padmavathy, S., & Ashok, J. (2012). Merger announcements and stock price behaviour: Empirical evidence from Indian stock market. International Research Journal of Finance and Economics, (83), 153-160.

Ramakrishnan, K. (2008). Long-term post-merger performance of firms in India. Vikalpa, 33(2), 47-63.

Rhoades, S. A. (1993). Efficiency effects of horizontal (in-market) bank mergers. Journal of Banking & Finance, 17(2-3), 411-422.


  • There are currently no refbacks.

Editorial Office:

Educational Research Multimedia & Publications,
S.N. 21, Plot No 24, Mirza Ghalib Road Malegaon Nasik,
Maharashtra India - 423203.
+919764558895 (whatsapp),,

Copyrights © 2010-2020 - ERM Publications, India     

This work is licensed under