Title: Impact of cross-border acquisitions' announcements on shareholders' wealth: evidence from India

Authors: Neelam Rani; nr@iimshillong.in Yadav; P.K. Jain

Addresses: Rajiv Gandhi Indian Institute of Management Shillong, Mayurbhanj Complex, Nongthymmai, Shillong – 793014, Meghalaya, India ' Department of Management Studies, Indian Institute of Technology Delhi, Hauz Khas, New Delhi, 110016, India ' Department of Management Studies, Indian Institute of Technology Delhi, Hauz Khas, New Delhi, 110016, India

Abstract: This study analyses 268 cross-border acquisitions of Indian acquirer companies to capture the returns to shareholders as a result of the acquisition announcements during the period January 2003 to December 2008 using the event study methodology. We focus on cross border acquisitions, stake-wise acquisitions, considering the target firm both from developed market as well as from emerging market. Acquisitions of targets from developed markets are further analysed among target from USA and from other developed markets. Indian stock market reacts positively to the announcements of cross-border acquisitions. We find that Indian acquirers experience positive and significant abnormal returns of 4% over days (−5, +5) for cross-border acquisitions. We also find that cross-border acquisitions of targets from developed markets outperform acquisitions of targets from emerging markets. The acquirers of full control (control of more than 74% stake) experience a higher gain than the acquirer of majority stake between 51 and 74%.

Keywords: event study; stock market valuation; cross-border M&A; mergers and acquisitions; India; shareholder value; emerging markets; developed markets; cross-border acquisitions; acquisition announcements.

DOI: 10.1504/GBER.2015.072493

Global Business and Economics Review, 2015 Vol.17 No.4, pp.360 - 382

Available online: 15 Oct 2015 *

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