Title: Are the Indian corporates creating value through acquisitions in the US and European markets?
Authors: Geeta Duppati; Narendar V. Rao; Stuart Locke
Addresses: Waikato Management School, University of Waikato, Hamilton, New Zealand ' Department of Accounting, Business Law, and Finance, Northeastern Illinois University, Chicago, Illinois, USA ' Department of Finance, Waikato Management School, University of Waikato, Hamilton, New Zealand
Abstract: This paper examines the stock market reactions to a sample of merger and acquisition (M&A) cases following the liberalisation of the policy regime by the Indian Government between 2000 and 2011. The stock market reacted differently to the announcements of overseas foreign direct investment related to M&As by Indian corporates. In some cases, the stock market reacted negatively in the short-term to the announcement but favourably in the post-acquisition period. In other cases, there was a favourable reaction or an unfavourable reaction in the short-term after the announcement and the longer term of the post-acquisition period. Drawing on secondary information, this paper offers explanations for the stock market reactions. Context is important and the specific characteristics of the Indian companies may have affected the outcomes. Though each case is unique, there are trends in approaches that are discernible. This paper also investigates the relationship between media coverage of company events such as announcements of mergers and acquisitions and the market reaction to such announcements. The results indicate that a variety of factors are responsible for overseas investment.
Keywords: announcement effect; outward foreign direct investment; cross border mergers and acquisitions; mature markets; emerging markets.
International Journal of Business and Globalisation, 2017 Vol.19 No.1, pp.27 - 51
Received: 01 Feb 2016
Accepted: 18 Jan 2017
Published online: 12 Jul 2017 *