Journal of Management Research

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Winners and Losers in M&a Game-Evidence from Manufacturing Companies in India


Affiliations
1 L. M. Thapar School of Management Thapar University, PO Box 32 Patiala 147004, India
2 Vinod Gupta School of Management IIT Kharagpur, Kharagpur 721302, India
     

   Subscribe/Renew Journal


Mergers and acquisitions (M&A) have been widely used by companies around the world and have an ever increasing presence in Indian business. Yet various academic and literature reviews show that there is no conclusive view on whether M&A strategies help in improving performance or deteriorating the same. There are more of (loser) failure companies than success (winner) companies when they adopt M&A. This paper considers the M&A in Indian manufacturing companies and classifies them into success (winner) and failure (loser) cases based on improvement in return on net worth after three years post M&A period.

Keywords

Merger, Acquisition, Success, Failure, Financial Ratios, Manufacturing
User
Notifications

  • Barai, P. and Mohanty, P. (2010), Short Term Performance of Indian Acquirers- Effects of Mode of Payment, Industry. Retrieved on November 17, 2012, from Social Science Research Network : http://ssrn.com/abstract=1697564

  • Bosecke, K. (2009), Fundamentals, in Value Creation in Mergers, Acquisitions, and Alliances, pp. 5–24, Springer.

  • Brailsford, T. and Knights, S. (1998), The Financial and Non-financial Effects of Corporate Takeovers, Melbourne Institute of Applied Economics and Social Research, The University of Melbourne.

  • Brouthers, K. D., Hastenburg, P. V. and Ven, J. (1998), If Most Mergers Fail Why Are They So Popular?, Long Range Planning, 31(3): 347–353.

  • DePamphilis, D. M. (2010), Mergers, Acquisitions, and Restructuring Activities (5th Ed), Academic Press, USA.

  • Flanagan, D. J. (1996), Announcements of Purely Related and Purely Unrelated Mergers and Shareholder Returns: Reconciling the Relatedness Paradox, Journal of Management, 22(6): 823–835.

  • Frederikslust, R. A., Wal, V. V. and Westdijk, H. (2005), Shareholder’s Wealth Effects of Mergers and Acquisitions. Retrieved on November 20, 2012, from Working paper, Erasmus University: http://www.efmaefm.org/efma2005/papers/262-vanfrederikslust_ paper.pdf.

  • Healy, P. M., Palepu, K. G. and Ruback, R. S. (1992), Does Corporate Performance Improve after Mergers?, Journal of Financial Economics, 31(2): 135–175.

  • Herman, E. and Lowenstein, L. (1988), The Efficiency Effects of Hostile Takeovers, Knights, Raiders, and Targets, 211–240.

  • Jain, B. A. and Kini, O. (1994), The Post Issue Operating Perforamnce of IPOs Firms, Journal of Finance, 49: 1699–1726.

  • John, K. and Ofek, E. (1995), Asset Sales and Increase in Focus, Journal of Financial Economics, 37: 105–126.

  • Junna, O. (2008), Post Acquisition Performance of Active Acquirers of Divested Assets in the Software Industry. Available at https:// aaltodoc.aalto.fi/handle/123456789/1101, accessed on 10 January 2013.

  • Kaplan, S. (1989), The Effect of Management Buyouts on Operating Performance and Value, Journal of Financial Economics, 24: 217–254.

  • Kaplan, S. N. and Weisbach, M. S. (1992), The Success of Acquisitions: Evidence from Divestitures, Journal of Finance, 47: 107– 38.

  • Kar, R. N. and Soni, A. (n.d.), Assessing the Impact of Mergers and Acquisitions on Performance: The Indian Evidence. Retrieved on November 15, 2012, from World Finance Conference: http://world-finance-conference.com/papers_wfc/683.pdf.

  • Katsuhiko, I. and Noriyuki, D. (1983), The Performances of Merging Firms in Japanese Manufacturing Industry: 1964-75, The Journal of Industrial Economics, 31(3): 257–266.

  • Kumar, R. (2009), Post-Merger Corporate Performance: An Indian Perspective. Management Research News, 32(2): 145–157.

  • Larsson, R. and Finkelstein, S. (1999), Integrating Strategic, Organisational, and Human Resource Perspectives on Mergers and Acquisitions: A Case Survey of Synergy Realisation, Organisation Science, 10(1): 1–26.

  • Leepsa, N. M. and Mishra, C. S. (2012), Post Merger Financial Performance: A Study with reference to Select Manufacturing Companies in India, International Research Journal of Finance and Economics, (83).

  • Liu, H. F. and Hu, Z. H. (2010), Merger Optimisation of Sales Network after Mergers and Acquisitions in Textile or Garment Industry. pp. 152-155, s.l, IEEE.

  • Loughran, T. and Ritter, J. (1995), The New Issues Puzzle, Journal of Finance, 50: 23–51.

  • Mantravadi, P. and Reddy, A. V. (2008), Post-Merger Performance of Acquiring Firms from Different Industries in India, International Research Journal of Finance and Economics, 22: 192–204.

  • Mastracchio, N. J. and Zunitch, V. M. (2002), Difference Between Mergers and Acquisitions. Retrieved from Journal of Accountancy: http://www.journalofaccountancy.com/Issues/2002/Nov/Difference Between Mergers And Acquisitions. htm?action=print.

  • Pautler, P. A. (2001), Evidence on Mergers and Acquisitions, Bureau of Economics, Federal Trade Commission, USA.

  • Pazarskis, M., Vogiatzogloy, M., Christodoulou, P. and Drogalas, G. (2006), Exploring the Improvement of Corporate Performance after Mergers – the Case of Greece, International Research Journal of Finance and Economics, 6: 184–192.

  • Phelan, S. E. and Mantecon, T. (2010), Acquisition Performance: Experience or Competence. Retrieved from The free library: http:// faculty.unlv.edu/phelan/Research/JABE%20Paper.pdf.

  • Saboo, S. and Gopi, S. (2009), Comparison of Post-Merger Performance of Acquiring firms (India) involved in Domestic and Cross-Border Acquisitions. Retrieved November 20, 2012, from http://mpra.ub.uni-muenchen.de/19274/1/Comparison_of_Post- Merger_Performance_of_Acquiring_Firms_India_involved_in_Domestic_and_Cross-Border_Acquisitions.pdf

  • Sirower, M. (1997), De Valstrik van Synergies, Amsterdam.

  • Srikanth, K. (2005), Acquisition Experience and Value Creation, Academy of Management Proceedings, pp. 1–6, Academy of Management.

  • Vanitha, S. and Selvam, M. (2007), Financial Performance of Indian Manufacturing Companies during Pre and Post Merger, International Research Journal of Finance and Economics, (12): 7–35.

  • Xiao, X. and Tan, L. (2007), Research of M&A Performance of Listed Companies in China based on EVA. Retrieved on May 14, 2010, from http://ieeexplore.ieee.org/xpls/abs_all.jsp?arnumber=5190469&tag=1.


Abstract Views: 460

PDF Views: 3




  • Winners and Losers in M&a Game-Evidence from Manufacturing Companies in India

Abstract Views: 460  |  PDF Views: 3

Authors

N. M. Leepsa
L. M. Thapar School of Management Thapar University, PO Box 32 Patiala 147004, India
Chandra Sekhar Mishra
Vinod Gupta School of Management IIT Kharagpur, Kharagpur 721302, India

Abstract


Mergers and acquisitions (M&A) have been widely used by companies around the world and have an ever increasing presence in Indian business. Yet various academic and literature reviews show that there is no conclusive view on whether M&A strategies help in improving performance or deteriorating the same. There are more of (loser) failure companies than success (winner) companies when they adopt M&A. This paper considers the M&A in Indian manufacturing companies and classifies them into success (winner) and failure (loser) cases based on improvement in return on net worth after three years post M&A period.

Keywords


Merger, Acquisition, Success, Failure, Financial Ratios, Manufacturing

References