The Consequences of Mergers and Acquisitions on the Value of Stocks Performance in India’s Banking Sector

Abstract

Mergers & Acquisitions are one of the most successful scaling up and company development strategies. Despite being largely acknowledged in developed economies, these strategies are commonly employed in developing countries like India. The event study approach is applied in this study to assess the consequences of Mergers & Acquisitions (M&A) on the value of stocks performance in India’s banking sector from 2013 to 2020. The market study approach has used to determine the Abnormal return (AR) and Cumulative abnormal return (CAR) in order to analyze how the phenomena affected share prices prior to and following the occurrence. Event window has been used for this purpose for 81 days (40, 40), whereas estimate window is 200 days. The findings show divergent results on the M&A activity influence the stock price performance. Research findings reveal that while few banks saw positive AR and CAR following the M&A, the bulk of banks experienced negative returns. Overall, the results reveal that the market’s response to the recurrence of M&As in India’s banking sector has unfavorable. Findings may be useful in providing managers and investors with new views while making investment-related decisions.