Role of mergers and acquisitions on corporate performance: emerging perspectives from Indian IT sector

Abstract

This article is an attempt to investigate the impact of mergers and acquisitions (M&Amp;As) on corporate performance of Indian IT sector for the period 2007–2015. The focus of this article is on Indian IT sector as it has been the growth engine of the economy and emerging as its most internationalised sector. This article has engaged, fixed and random effect panel data models to measure the impact of M&Amp;As on various financial variables with comparative analysis of domestic and cross border deals. The findings reveal that the M&Amp;As have significant positive impact on Return on Net worth and Revenue of IT companies in India when both domestic and cross-border regions were considered together. Whereas, Earnings Before Interest, Taxes, Depreciation and Amortisation experienced significant decline. Return on Capital Employed did not experience any significant impact due to M&Amp;As. When the impact of M&Amp;As was analysed separately for domestic and cross-border deals, it was obtained that the impacts are in different directions for domestic and cross-border deals in two out of four variables. The significant inference is that domestic deals per se are much better than the cross border deals.