A study on domestic vs cross-border acquisitions in the consumer cyclical sector in Asia

Abstract

The work aims to study and analyze the impact of domestic and cross-border acquisitions in the consumer cyclical sector of Asia with particular emphasis on Indian markets on the shareholder return and the financial performance of the acquiring companies. The study employs two quantitative methods. The first method which is the event study method is used to evaluate whether the mergers and acquisitions (M&As) deal has generated any positive abnormal return for the shareholders and compare which acquisition had a superior impact on the shareholder return — cross-border or domestic M&As. The second method is the analysis of the M&A deal with the help of six major financial ratios which have proven to directly impact the financial performance of the company’s merger and post-merger performance. Pre-merger and post-merger averages of these ratios are analyzed for the sample companies to understand whether the M&As had a positive or negative impact on the financial performance of the company. This would ultimately help infer whether cross-border or domestic M&As are superior for consumer cyclical companies in India.