Method of Payment and Operating Performance of Acquiring Companies: A Study of Indian Mergers

Dr Rashmi I Turamari, Dr R L Hyderabad

Abstract


The present paper aims at analyzing the operating performance of 84 acquiring companies involved in M&As in India between 2000-2010. The study examines the relation between the change in operating performance of acquiring firms and cash and stock methods of payment. The results of the study indicate that the operating performance of sample acquiring companies deteriorates after the merger in the long run. Out of 5 measures of performance 3 measures shows that the control firms outperform sample firms. The study also concludes that Cash flows increase significantly following mergers in case of stock financed mergers but decline for cash financed mergers.

 

Keywords: Acquisitions, Cash adjusted assets, Cash Mergers, Mergers, Operating income

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References


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