Title: Effect of merger announcements on stock prices: evidence from Indian public sector banks

Authors: Kajal Mittal; Sandeep Singh Virdi; Inu Kumari

Addresses: School of Management Studies, Punjabi University, Patiala, Punjab, India ' School of Management Studies, Punjabi University, Patiala, Punjab, India ' Chitkara Business School, Chitkara University, Rajpura, Punjab, India

Abstract: This study examined the stock market reactions of acquirer public sector banks in India to merger announcements. All merger deals announced related to public sector banks from January 2016 to December 2022 were covered in the study. Stock prices were collected from the Bombay Stock Exchange website. The analysis observed positive returns on announcement day for all the acquirer banks except for Canara Bank. It can be noted from the upward and downward movement of AAR surrounding the event day that the market reacted quickly to the merger announcements in the Indian banking sector. The cumulative average abnormal returns results reported negative returns through the entire 21 days event window except for one day. These findings indicated that merger announcements created market turbulence and generated lower wealth for acquirer banks in India. These results may help bank managers and investors to formulate investment policies and strategies accordingly.

Keywords: merger announcements; public sector banks; acquirer banks; stock prices; event study.

DOI: 10.1504/AAJFA.2026.152387

Afro-Asian Journal of Finance and Accounting, 2026 Vol.16 No.2, pp.207 - 220

Received: 03 Feb 2024
Accepted: 08 Apr 2024
Published online: 18 Mar 2026 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article