Market reactions and the role of corporate governance in mergers & acquisitions : evidence from Indian firms.
The importance of Merger and Acquisitions (M&A) as a strategy to pursue organizational objectives is evident by its increase over the years. This paper aims to analyze the M&A landscape in India. Particularly, we want to study how the strategic M&A’s decision of acquiring firms is influe...
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| Main Authors: | , , |
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| Other Authors: | |
| Format: | Final Year Project |
| Language: | English |
| Published: |
2010
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| Subjects: | |
| Online Access: | http://hdl.handle.net/10356/35556 |
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| Institution: | Nanyang Technological University |
| Language: | English |
| Summary: | The importance of Merger and Acquisitions (M&A) as a strategy to pursue organizational objectives is evident by its increase over the years. This paper aims to analyze the M&A landscape in India. Particularly, we want to study how the strategic M&A’s decision of acquiring firms is influenced by their pre-acquisition characteristics and how the market reacts to such a decision.
Five corporate governance factors namely, proportion of independent directors, board size, Chairman-CEO duality, board activities, CEO tenure and number of board meetings were used as predictors to determine whether the company is likely to pursue a focused or diversified acquisition. This is coupled with three financial factors: leverage, cashflow and profitability as control variables. The final result of this study may provide valuable insights to managers in ensuring a balanced focus on these factors in managing a firm.
The statistical analyses reaffirmed our main hypothesis that focused acquisitions lead to positive market reaction. In addition, companies with high proportion of independent directors, Chairman-CEO duality, high leverage and high profitability are more likely to conduct focused acquisition. |
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