Abstract
M&As are inorganic growth strategies which are not only related to accounting measures of performance of firms but also affect the wealth of shareholders either positively or negatively. According to the hubris hypothesis (Roll, 1986), M&A announcements result in a decrease in the stock price of the acquiring firm, leading to a fall in its value. On the other hand, the synergy hypothesis states that the two firms merge to take advantage of economic gains that result from sharing of resources, resulting in increased returns to the shareholders of both firms. The purpose of this paper is to find out whether there is any difference in the stock price and returns before and after the announcement of M&A. Also, it has been found that Indian stock market is efficient in a semi-strong form in the event of successful merger announcements.
Get full access to this article
View all access options for this article.