Impact of Mergers and Acquisitions on Accounting-based Performance of Acquiring Firms in India

2019 ◽  
pp. 097215091985200
Author(s):  
Puja Aggarwal ◽  
Sonia Garg
Keyword(s):  
Mergers And Acquisitions ◽  
Service Sector ◽  
Manufacturing Firms ◽  
Medium Term ◽  
Paired Sample ◽  
Similar Comparison ◽  
Acquiring Firms ◽  
Restructuring Strategy ◽  
Work Done ◽  
The Impact

Purpose: Merger is a corporate restructuring strategy that affects the performance of the company on many parameters. This study aims to examine the growth of M&A transactions in India in last two decades and the impact of merger on the accounting-based performance of the acquiring company. Methodology: The data of 68 mergers during the year 2007-08 - 2011-12 is analysed to capture the said impact. The accounting-based performance is measured on seven variables divided into three categories- profitability, liquidity and solvency. The accounting-based performance five years’ pre-merger is compared with five years’ post-merger. The similar comparison is done for 3 years pre and post-merger. Average of all the 7 parameters pre and post-merger are compared arithmetically and then using paired sample ‘t’test. The firms were also divided into manufacturing and service sector firms to see the impact of merger on different categories of firms. Findings: We found that merger has significantly impacted profitability and liquidity of the acquiring firm positively in five years but had no significant impact on solvency position of the company. Service sector firms have outperformed manufacturing firms and started showing significant improvement in accounting variables in medium term. Originality: We assure the originality of the work done in this article.

The Effects of Mergers and Acquisitions on Taiwanese Corporations

2000 ◽  
Vol 03 (02) ◽  
pp. 183-199 ◽  
Author(s):  
Tsung-Ming Yeh ◽  
Yasuo Hoshino
Keyword(s):  
Stock Market ◽  
Mergers And Acquisitions ◽  
Stock Returns ◽  
Stock Prices ◽  
Corporate Performance ◽  
Accounting Performance ◽  
Acquiring Firms ◽  
The Impact

This paper investigated the impact of M&As on both the acquiring firms' stock prices and corporate performance by using evidence from 20 Taiwanese corporations. Our data suggest that the accounting performance of Taiwanese acquiring firms failed to meet the stock market's expectation of future improvements in the operations of the acquiring firms. The stock market reacted in favor of the announcements of M&As, however, there is a downward change in the acquiring firms' profitability from premerger to postmerger periods. However we do not find any significant correlation between stock returns and the change in accounting performance, which is different from some previous studies.

scholarly journals Board Characteristics and Intellectual Capital Performance: A Comparison of Service vs. Manufacturing Firms in India

2019 ◽  
Vol 6 (1) ◽  
pp. 1
Author(s):  
G Bharathi Kamath
Keyword(s):  
Corporate Governance ◽  
Panel Data ◽  
Intellectual Capital ◽  
Service Sector ◽  
Manufacturing Sector ◽  
Manufacturing Firms ◽  
Service Firms ◽  
Board Characteristics ◽  
Preliminary Study ◽  
The Impact

<p><strong>Purpose: </strong>This study aims at analysing the board characteristics of select manufacturing and service firms in India. It attempts to explore whether these characteristics influence Intellectual capital (IC) efficiency of service sector firms or manufacturing firms.</p><p><strong>Design: </strong>The study uses panel data and multiple regression to examine the firms’ performance. The period of study is three years from 2015-16 to 2017-18; thirty firms each from manufacturing and service sector is taken for study.</p><p><strong>Findings: </strong>The empirical evidence is quite interesting. The board characteristics of both groups have varied differences. It can also be observed clearly that the impact of board characteristics on IC performance is more in the service sector than in the manufacturing sector.</p><p><strong>Research limitations/implications: </strong>the study focusses only on select firms from manufacturing and service sector as a preliminary study. The study can be expanded to cover sectors and industries.</p><div><p><strong>Originality and value: </strong>There are several research studies that try to explore the impact of corporate governance on the financial performance of firms. However, there are none which looks into their impact on the intangible performance of firms.</p></div>

Proximity to urban centers in mergers and acquisitions

2017 ◽  
Vol 43 (11) ◽  
pp. 1292-1308 ◽  
Author(s):  
Patty Bick ◽  
Matthew D. Crook ◽  
Andrew A. Lynch ◽  
Brian Walkup
Keyword(s):  
Mergers And Acquisitions ◽  
Information Asymmetry ◽  
Rural Setting ◽  
Target Firm ◽  
Data Set ◽  
Content Type ◽  
Acquiring Firms ◽  
Announcement Returns ◽  
Deal Completion ◽  
The Impact

Purpose The purpose of this paper is to examine the impact firm proximity to financial centers has on announcement returns and time to deal completion for mergers and acquisitions. Design/methodology/approach Using a data set of merger and acquisition activity from 1986 to 2014, target and acquiring firms are classified as rural or urban based on their geographic proximity to major financial centers. The impact of this proximity on short-term acquisition announcement returns and on the amount of time required to complete the transaction are tested. Findings Markets react more favorably to the acquisition of firms headquartered in a rural area, likely due to increased information advantage on the part of the acquiring firm. Furthermore, the acquisition of a rural firm requires greater time to completion. Practical implications Acquiring firms may be able to use information asymmetry to their advantage when acquiring firms located in a more rural setting with higher levels of information asymmetry. However, this requires the acquiring firm to generate an informational advantage and will also require a greater time commitment on average to complete the deal. Originality/value While prior literature has demonstrated that the distance between target and acquirer can affect acquisition returns and time to deal completion, this study adds to the literature by demonstrating that the geographic location of the target firm relative to major financial hubs can have a unique effect on mergers and acquisitions as well.

scholarly journals Effect of Mergers and Acquisitions on Performance of Enterprise Value

2018 ◽  
Vol 5 (2) ◽  
Author(s):  
T. Sathishkumar ◽  
P.N. Assai Tamby
Keyword(s):  
Mergers And Acquisitions ◽  
Stock Price ◽  
Business Performance ◽  
T Test ◽  
Mean Difference ◽  
Enterprise Value ◽  
Paired Samples ◽  
Acquiring Firms ◽  
The Mean ◽  
The Impact

In this study, we have made an analysis on the impact of Mergers and Acquisitions (M and A) on the performance of Enterprise Value in the post-merger period. For this purpose, ten firms were selected based on the adequacy of data for a period of ten years on a year-to-year basis from 2006-2007 to 2016-2017. The firms, which had gone into the M and A process during the financial year 2011–2012 are also considered for the study. Paired samples t-test is applied to study the mean difference in performance of Enterprise Value of the acquiring firms in the pre-and post-merger periods. From the analysis, it has been found that the acquiring firms drastically improved in stock price and business performance. As a result the acquiring firms are visible among competitors with a capacity to develop into something big in the future and merged firms feel that they have chosen a good acquirer firm. Hence, most of the acquiring firms have significant change in the performance of Enterprise Value in the post-merger period.

Measuring Post Merger Performance – A Study of Metal Industry

2016 ◽  
Vol 2 (8) ◽  
Author(s):  
Sonia Sharma
Keyword(s):  
Mergers And Acquisitions ◽  
Financial Performance ◽  
International Markets ◽  
Significant Decline ◽  
Metal Industry ◽  
Integration Process ◽  
Paired Sample ◽  
Long Run ◽  
The Difference ◽  
The Impact

In today's globalised economy, mergers and acquisitions activity has gained importance caused by intensifying competition liberalization and globalization, integration of national and international markets. The aim of this paper is to study the impact of merger on the financial performance of merging companies by examining some pre- merger and post- merger financial ratios. The sample consists of 9 BSE listed companies of metal industry involved in mergers during the year 2009-10. Paired sample t-test is carried out to assess the difference in performance between post-merger and pre-merger periods. The findings showed a marginal but not significant improvement in case of liquidity and leverage but the profitability results showed significant decline in RONW and ROA which are contrary to our hypothesis. The results of this study suggest that in case of M&A, synergy can be generated in long run with the careful usage of the resources. The success of M&A deals depends on post integration process, timely action and to keep check on the costs of integration process.

Impact of Demonetization on Indian Economy

2017 ◽  
Vol 9 (2) ◽  
pp. 100
Author(s):  
Rajiv Chopra
Keyword(s):  
Tax Evasion ◽  
Service Sector ◽  
Value Added ◽  
Medium Term ◽  
Downward Movement ◽  
Short Term ◽  
Gross Value Added ◽  
Illegal Activities ◽  
In The Beginning ◽  
The Impact

This paper analyses the short term costs and medium term benefits of demonetization and its Impact on the growth of various sectors of an economy where significant cash transactions are involved. It is evident from observed data that the impact of demonetization on Gross Value Added growth was modest. Although the Gross Value Added contracted marginally, it is projected to be positive in coming years. In the beginning it negatively impacted the segments of manufacturing and service sector showing the downward movement in various markets such as automobiles, consumer, real estate etc. Later with the remonetization and lower lending rates the growth of an economy has been recovering fast through increase in private consumption, disposable income and affordable loan. With digitization economy is moving towards cashless society and will bring more transparency in the system reducing tax evasion thereby curbing the use of black money for illegal activities and terror funding.

Cross-border mergers and acquisitions: Impact on marketing capability and firm performance

2021 ◽  
Vol 46 (2) ◽  
pp. 129-143
Author(s):  
Mahabubur Rahman ◽  
Mary Lambkin ◽  
SM Riad Shams
Keyword(s):  
Firm Performance ◽  
Mergers And Acquisitions ◽  
Developed Countries ◽  
Superior Performance ◽  
Marketing Capability ◽  
Tobit Regression ◽  
Research Attention ◽  
Cross Border ◽  
Acquiring Firms ◽  
The Impact

Emerging country firms have been increasingly engaging in cross-border mergers and acquisitions, and these acquirers predominantly acquire firms from developed countries. The motivation for such acquisitions is to achieve market access but also to benefit from transfers of cross-border managerial skills and knowledge. The performance of such acquisitions has started to receive some research attention, particularly financial performance, but the transfers to other areas such as marketing have not yet been explored. This article addresses this gap by studying the experience of 34 acquirers from emerging countries which acquired firms in developed countries. This study uses two-stage window data envelopment analysis (DEA) and Tobit regression to investigate the impact of these acquisitions on the marketing capability and overall firm performance of the acquiring firms. The results show that the marketing capability of the acquiring firms did improve in the post-merger years and this improvement can be partly attributed to the acquisition. The findings also show that the overall performance of the acquiring firms improved following acquisition, but this is a continuation of superior performance from the pre-merger years rather than a synergistic gain from the acquisitions.

Managing Service Quality, Food Quality, Price Fairness and Customer Retention: A Holistic Perspective

2020 ◽  
Vol 2 (1) ◽  
pp. 1-5
Author(s):  
Ammar Ahmed ◽  
Rafat Naseer ◽  
Muhammad Asadullah ◽  
Hadia Khan
Keyword(s):  
Service Quality ◽  
Food Quality ◽  
Service Sector ◽  
Customer Retention ◽  
Price Fairness ◽  
Policy Makers ◽  
Restaurant Management ◽  
The Subject ◽  
Research Propositions ◽  
The Impact

In this competitive environment, organizations strive to satisfy their customer by providing best quality service at affordable and fair prices with a view to enhance their revenues. To achieve the objective of revenue maximization, organizations strive to identify the factors that help them in retaining their customers. Drawing from the signalling theory of marketing, the current study proposes a novel conceptual model representing the impact of service quality with food quality and price fairness on customer retention in restaurant sector of Pakistan. The paper underlines an important arena of knowledge for academicians as well as organizational scientists on the subject. On the basis of literature available on the variables understudy, the present study forwards eight research propositions worthy of urgent scholarly attention. The conceptualized model of the present article can also be viewed significant in unleashing further avenues for the restaurant management entities, policy makers and future researchers in the domain of managing in the service sector businesses.

The Effect of Taxation and Corruption on Firm Growth: An Empirical Investigation for Vietnam

2016 ◽  
pp. 5-29
Author(s):  
Bich Le Thi Ngoc
Keyword(s):  
International Development ◽  
Firm Growth ◽  
Empirical Investigation ◽  
Manufacturing Firms ◽  
Economic Management ◽  
Tax Rate ◽  
Percentage Point Increase ◽  
Percentage Points ◽  
Point Increase ◽  
The Impact

The aim of this study is to analyze empirically the impact of taxation and corruption on the growth of manufacturing firms in Vietnam. The study employed pooled OLS estimation and then instrument variables with fixed effect for the panel data of 1377 firms in Vietnam from 2005 to 2011. These data were obtained from the survey of the Central Institute for Economic Management and the Danish International Development Agency. The results show that both taxation and corruption are negatively associated with firm growth measured by firm sales adjusted according to the GDP deflator. A one-percentage point increase in the bribery rate is linked with a reduction of 16,883 percentage points in firm revenue, over four and a half times bigger than the effect of a one-percentage point increase in the tax rate. From the findings of this research, the author recommends the Vietnam government to lessen taxation on firms and that there should be an urgent revolution in anti-corruption policies as well as bureaucratic improvement in Vietnam.

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