Abstract
The paper examines how mergers and acquisitions (M&As) in India after initiation of reforms in 1991 have affected firms’ financial performance. Using panel data and applying the method of difference GMM, it is found that neither market concentration nor M&As affected firms’ financial performance because of the multidirectional structure-conduct-performance relationships. Instead, interindustry differences in performance have been caused by capital intensity, efforts relating to marketing and distribution, and foreign technology. The findings suggest for a relook at the competition policies and laws, international trade, investment and technology development as they influence financial performance through market structure along with firms’ business strategies, efficiency and competitiveness.
Highlights
Initiation of reforms has changed the business conditions in India considerably
The findings suggest for a relook at the competition policies and laws, international trade, investment and technology development as they influence financial performance through market structure along with firms’ business strategies, efficiency and competitiveness
It is observed that the multinational corporations (MNCs) have taken active part in acquisitions and it has been an important channel of inward foreign investments3
Summary
Initiation of reforms has changed the business conditions in India considerably. Despite its slow pace in recent years, the reform measures in general have continued aiming at enhanced competition in different markets. The findings relating to influence of M&As on performance are inconsistent, and there is need to revisit the relationships It is more pertinent in Indian context as there is barely any improvement in performance after introduction of liberal policies (Basant & Mishra, 2016). The above developments in Indian industry sector are quite complex This creates the necessity of examining how M&As have affected business performance given the ongoing processes of policy and regulatory changes and subsequent strategic conjectures, for the following reasons: First, while cost-efficiencies do not show any evidence of improvement, export intensity has gone up in major industries with marginal decline in imports (Basant & Mishra, 2016). The last section highlights the major findings and draws the policy and regulatory issues
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