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Emerging Market Bidder Returns and the Choice of Payment Method in Mergers and Acquisitions: Evidence from India
Published in SAGE
2018
Volume: 17
   
Issue: 3
Pages: 386 - 411
Abstract
Consistent with other evidence on short-run effects of mergers and acquisitions (M&A) announcements on acquiring firm’s shareholder wealth in emerging markets, our study reveals that M&A deals in India, irrespective of the payment method, are not value destroying. Cash deals and stock deals create shareholder wealth on deal announcements. We offer ‘pseudo-cash deal hypothesis’ to explain this phenomenon. We also observe that bigger the relative size of the deal, greater is the abnormal return on deal announcements. We observe that acquirers with high promoter holdings are highly reluctant to offer stock when they acquire a majority stake. However, bigger deals, deals for listed target firms, and deals in the information technology sector, command stock offers. JEL Classification: G34, G14
About the journal
JournalData powered by TypesetJournal of Emerging Market Finance
PublisherData powered by TypesetSAGE
ISSN0972-6527
Open AccessNo