Shareholder’s reaction to Merger and acquisition announcement: evidence from india’s Manufacturing sector
https://doi.org/10.26794/2587-5671-2022-26-5-149-157
Abstract
Mergers and acquisitions performance is akin to financial perplex that researchers have been trying to solve. The objective of the study is to examine the reaction of shareholders to the announcement of mergers and acquisitions in the pre-event, around the event and during the post-event period of the Indian manufacturing firms. The event study research methodology has been used for analysis along with parametric and non-parametric tests. The study shows that investors can earn a significant return if they purchase shares of the acquiring company one day before and sell them one day after the announcement day. The findings concluded that while the announcement of a merger or acquisition generates a positive reaction, this reaction is only temporary and is swiftly diluted. This shows that investors initially overreacted to these announcements and took immediate corrective action. The study recommends to investors, “Earlier the shareholders sell, more the shareholders gains”.
About the Authors
I. Gupta
Amity University Uttar Pradesh (AUUP)
India
Competing Interests:
India
Isha Gupta — R esearch Scholar at Amity College of Commerce and Finance
Noida
Competing Interests:
The authors have no conflicts of interest to declare
T. V. Raman
Amity University Uttar Pradesh (AUUP)
India
Competing Interests:
India
Thanikella V. Raman — MBA, PhD in Management, Prof., Head of Department of Accounting and Finance, Amity Business School
Noida
Competing Interests:
The authors have no conflicts of interest to declare
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Review
For citations:
Gupta I., Raman T.V. Shareholder’s reaction to Merger and acquisition announcement: evidence from india’s Manufacturing sector. Finance: Theory and Practice. 2022;26(5):149-157. https://doi.org/10.26794/2587-5671-2022-26-5-149-157
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