Asian Journal of Managerial Science (AJMS)
Creating Wealth for Shareholders: Evaluating the Performance of Merging CompaniesAuthor : V. Shanthaamani and V. B. Usha
Volume 8 No.1 January-March 2019 pp 6-10
Mergers and Acquisitions as business strategies are widely used to increase the wealth of shareholders and the corporate performance. Shareholders wealth may be influenced by many factors such as the corporate performance, deal type, geographic location of the company and so on. The study is conducted with three main objectives of assessing the impact of merger announcements on merging companies’ share prices, analyse the nature of shareholders’ returns of the merging companies and assess the determinants of shareholders returns. NSE listed companies which have made merger announcements during the period of 1st January 2012 to 31st December 2017 shall constitute the sample population for the research, while 40 merger announcements of computer software industry have been taken as sample size. Mean adjusted model has been used for calculating the abnormal returns while the statistical tools of paired samples t-test, ANOVA and multiple regressions have been used for analyzing data. Results of the research reveal that merger announcements exert significant impact on share prices. Further, shareholders wealth has witnessed an increase after the merger announcements. Finally, shareholders wealth has not been affected by the company’s performance.
Computer Software Industry, Mergers, Mean Adjusted Abnormal Returns
 Anand, M. & Singh, J. (2008). Impact of Merger Announcements on Shareholders Wealth: Evidence from Indian Private Sector Banks. Vikalpa, 33(1). 35-54.
 Banerjee, P., P. Banerjee, S. De, J. Jindra, & J. Mukhopadhyay. (2014). Acquisition pricing in India during 1995-2011: Have Indian acquirers really beaten the odds? Journal of Banking & Finance, 38, 14-30.
 Bednarczyk, T. P., Schiereck, D. & Walter, H.N. (2010). Cross-border acquisitions and shareholder wealth: Evidence from the energy and industry in Central and Eastern Europe. Journal for East European Management Studies, 106-127.
 Brown S. & Warner J. (1985). Using daily stock returns: the case of event studies. Journal of Financial Economics, 14, 3-31.
 Delaney, T. & Wamuziri, S. C., (2004). The impact of mergers and acquisitions on shareholder wealth in the UK construction industry. Engineering, Construction and Architectural Management, 11(1), 65-73.
 Jayaraman, N., Khorana, A. and Nelling, E. (2002). An analysis of the determinants and shareholder wealth effects of Mutual Fund mergers. The Journal of Finance, 1521-1551.
 Jagtiani, Julapa & Kotliar, Ian & Maingi, Raman Quinn. (2016). Community bank mergers and their impact on small business lending. Journal of Financial Stability. Elsevier, 27(C), 106-121.
 Kumar, R. (2009). Post-merger corporate performance: An Indian perspective. Management Research News, 32(2), 145-157.
 Liargovas, P. and Repousis, S. (2011). The impact of Mergers and Acquisitions on the performance of the Greek Banking Sector: An Event Study Approach. International Journal of Economics and Finance, 3(2), 89-100.
 Mann, B. and Kholi, R. (2011). Target shareholders wealth creation in domestic and cross-border acquisitions in India. International Journal of Commerce and Management. 21(1). 63-81.
 Rahim, N. M. & Ching Pok, W. (2013). Shareholder wealth effects of M & As: the third wave from Malaysia. International Journal of Managerial Finance, 9(1).
 Shobhana, V.K. and Deepa, N. (2012). Impact of Mergers and Acquisitions on the shareholder wealth of the select acquirer banks in India: An Event Study Approach. The IUP Journal of Bank Management, 11(2). 26-31.
 Shukla, A. and Gekara, M.G. (2010). Effects of Multinational Mergers and Acquisitions on Shareholders Wealth and Corporate Performance. The IUP Journal of Accounting Research & Audit Practices, 9(1 & 2), 44-62.
 Venkatesan, S. and Govindarajan, K. (2011). Acquisition Activities of Public Sector Banks in India and its impact on Shareholders Wealth. International Research Journal of Finance and Economics, 67, 63-71.