Ex ante characteristics of acquirers and targets in Indian financial sector: an empirical analysis Online publication date: Wed, 13-Jan-2016
by Priya Bhalla
International Journal of Financial Services Management (IJFSM), Vol. 8, No. 2, 2015
Abstract: In recent times, the entities in the financial sector are consolidating at a rapid pace. The empirical literature points to uncertainty in the empirical evidence on its consequent benefits. What motivates some entities to acquire others? In spite of the intense impact that Merger and Acquisition (M&A) activity in the financial sector could have on financial stability, there are very few studies available on M&A in the Indian financial sector. The analysis provides insights into the ex ante factors that motivate firms to acquire other firms. Based on the binomial and multinomial logit regressions, the study finds support for the market for corporate control as bigger entities are more likely to be acquirers. The finding provides support to the monopoly power and managerial motives. It was also observed that acquirers and targets are bigger than non-participant firms. The joining together of big acquirers and targets has significant implications for financial stability.
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