Mergers and Value Creation : Evidence from the Indian Context

The paper tries to explore the relationship between mergers and corporate performance. Mergers and acquisitions have been adopted as one of the important strategies of corporate finance to create wealth to the shareholders. There are a plenty of studies abroad pertaining to value creation to shareholders through mergers and acquisitions. The literature depicts that there is a mixed view with regard to wealth creation to shareholders. However, there is a dearth of studies in the Indian context as to whether mergers create value to shareholders. The objective of this study is to find out whether mergers and acquisitions generate abnormal return to the shareholders of the acquiring firms. The paper tries to figure out whether any positive return is generated by the firm because of mergers and acquisitions in short run by using event study methodology. The study considers domestic mergers for the period 2004-2014 to analyze the effect of merger on shareholder wealth by using BSE listed companies