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Default Risk Level Changes in Cross-Border Mergers and Acquisitions: Indian Scenario


Affiliations
1 Department of Management, Pondicherry University, Karaikal, India
 

With cross-border mergers and acquisitions (M&As) data we observe the role institutional, managerial and geographic factors on the default risk of acquiring companies after the merger. Using Distance to Default model the study analysing the default risk level of acquiring firm after mergers and acqusitions. The study reveals that M&A plays an important role in firms default risk. The acquiring firm is getting the advantage of overvaluation and stock price volatility. Geographic factors and industrial diversification also have a significant effect on post-merger default risk. From the study, it is clear that the corporates can manage their risk through cross- border mergers and acquisitions

Keywords

Cross-Border Mergers and Acquisitions, Acquiring Company, Target Company, Default Risk, Stock Price Volatility.
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Abstract Views: 134

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  • Default Risk Level Changes in Cross-Border Mergers and Acquisitions: Indian Scenario

Abstract Views: 134  |  PDF Views: 76

Authors

T. C. Arun
Department of Management, Pondicherry University, Karaikal, India
T. V. Akhila
Department of Management, Pondicherry University, Karaikal, India
M. Dharmalingam
Department of Management, Pondicherry University, Karaikal, India

Abstract


With cross-border mergers and acquisitions (M&As) data we observe the role institutional, managerial and geographic factors on the default risk of acquiring companies after the merger. Using Distance to Default model the study analysing the default risk level of acquiring firm after mergers and acqusitions. The study reveals that M&A plays an important role in firms default risk. The acquiring firm is getting the advantage of overvaluation and stock price volatility. Geographic factors and industrial diversification also have a significant effect on post-merger default risk. From the study, it is clear that the corporates can manage their risk through cross- border mergers and acquisitions

Keywords


Cross-Border Mergers and Acquisitions, Acquiring Company, Target Company, Default Risk, Stock Price Volatility.

References