Jaypee Business School (A Constituent of Jaypee Institute of Information Technology), Sector-62, Noida-201307, Uttar Pradesh, India
*Corresponding author email id: vermaanehaa@gmail.com
Online published on 22 March, 2016.
The purpose of this research paper is to study the shareholders ’wealth effects of the mergers and acquisitions (M&A) in the Indian Telecom Industry that took place during the period of 2000–2001 to 2009–2010. This study attempts to analyse the wealth generated to the acquirers ’shareholders by the announcement of M&A in the Indian Telecom Sector.
The authors have employed event-study methodology to examine short-term stock price reaction of M&A announcements. Fama-French three-factor model is used to estimate abnormal returns of the acquiring companies.
The results suggest that M&As are neither wealth producing nor wealth destroying, but at best, wealth is only maintained in short term for the acquirer firms in the Indian Telecom Sector.
This paper investigates the shareholders wealth effects of the M&As in the Indian Telecom Industry. The motive of acquirer firms is the value creation and considering the increase in M&A activities. It is significant to examine whether value is created or not. Studying the economic gains that is value creation or destruction of M&A is one of the most desired research areas in financial economics. This study is thus an attempt to bridge the gap that exists in the literature for the value creation claims by acquirer firms.
Abnormal returns, Economic gains, Fama-French three-factor model, Indian telecom industry, Mergers and acquisitions (M&A), Shareholders wealth, Short-term stock performance
