| Summary: | From the past few decades, Mergers and Acquisitions (M&A) have dominated the
environment in which the companies operate. Various researches have also been carried
out where the main focus of the study is on the abnormal returns of the acquirers of the
firm after the merger. The results have revealed that on average, the returns to the target
companies are positive and that they gain from mergers. However, the bidder returns may
be zero or negative, but it still remains a puzzle if they gain from mergers in the long-run.
This research investigates the performance of mergers and acquisitions and its impact on
the returns of the acquirers of the firm. A study of 58 mergers and acquisitions of Indian
targets during the period 2003-2008 was undertaken to examine the pre acquisition and
post acquisition returns of acquirers in the long-term by assessing the extent to which
share price performance was abnormal. The main target companies were based in India.
The research methodologies, that is, event study methodology have been employed to
assess the performance of acquirers after the merger activity. The results of the event
study reveal that on an average, the acquiring companies experience a negative CAAR of
-0.69%.
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