International Journal of Enhanced Research in Management & Computer Applications

ISSN: 2319-7471, Vol. 11 Issue 12, December, 2022, Impact Factor: 7.751

An Empirical Review of Studies on Mergers &

Acquisitions
Sandeep Kumar1, Dr. Kushwinder Kaur2
1
Research Scholar, Department of Economics, Kurukshetra University, Kurukshetra
2
Assistant Professor, Directorate of Distance Education, Kurukshetra University, Kurukshetra

ABSTRACT

The present review is focused around the impact of merger and acquisition activities on various economic variables
of a firm. The review first summarizes academic literature with research focused on analyzing the motives behind
M&As. The second part of the literature gives and elaborative view towards literature on impact of M&A using the
industrial organization approach as suggested by Mcdougal, 1995 which suggested that the impact of M&As is
dependent on various factors and their economic and financial impact is highly influenced by the pre-merger status,
motive of M&A and the transparency in the process between the firms. Furthermore, the third section of the
literature review that focuses on the impact of M&A on various micro-economic factors giving special emphasis to
growth, size, profitability, concentration etc. The paper has given a unique insight of research under this topic with
respect to Indian firms and also suggests recommendation for future research. The paper is a unique attempt to
compile prominent studies in the field of M&A with special emphasis to the impact of M&As on micro economic
factors of the firm which is one of the least researched considerations under this topic.

Keywords:- mergers and acquisitions, firms, profitability, growth,

INTRODUCTION

All over the world, mergers and acquisitions (M&As) strategy is being harnessed extensively in the modern times. It
has been a popular choice for companies worldwide seeking to strengthen their businesses in the period of prolonged
uncertainties due to multiple benefits of M&As (Cristerna and Ventresca, 2020). It has been adopted as the fastest and
most effective way to expand the business in the new market since the merger in the United States. from 1895 to
1905. The strongest M&As at global level have been seen in the third year in a row, according to the Global M&A
Outlook (2020). It has also been observed that in the last few years there has been a significant increase in the number
of projects associated with M&As. These projects are funded by private [Link] types of mergers and
acquisitions have been identified by the world market; vertical integration refers to the merger of two companies in
different supply chains. Second, horizontal integration involves merging two similar firms within the same industry,
while third, diversification involves merging two firms from different industries (Morrison and Floyd, 2000). In
addition to changing the market environment, M&As activities are one of the major drivers of globalization. It affects
not only the firms involved, but also investment bankers, stock markets, governments, and society at large. Thus,
M&As have always been of great interest to researchers worldwide.

Adam Smith, an economist, conceptualized the idea of merging companies for mutual benefit in the 1700s. Then he
quoted "Seldom do businessmen (companies) of the same trade come together but end up harming the common good”.
Even though the prediction was made about 300 years ago, the initial studies in this field started around 1921 by
Dewing. After the great mergers of the 1980s, research into M&As has taken many paths. In the initial stages, finance
scholars dominated research on this topic, but after the publication of Haspeslagh and Jemison's book in 1991;

A number of studies have been conducted worldwide around the world to analyze the economic impact of mergers and
acquisitions (Larsson & Finkelstein, 1999; Birkinshaw, Bresman, &Hakanson, 2000; Bauer & Matzler, 2014). Later
research investigating began to gain momentum as it was found that M&As often goes go unexpected in terms of their
impact(Cartwright, 2006; Capasso&Meglio, 2005; Bauer & Matzler, 2014 ; Homburg & Bucerius, 2006 ; King et al.

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2004) for this many authors adapted to studies undertaken accounting measures and managerial surveys (Oler et al.
2008 ; Zollo& Meier, 2008).

This paper attempts to review the research already undertaken on the motives and effects of mergers and acquisitions on
the performance of firms, giving particular reference to the economic impact of these activities under the following
sections: 1) Studies on the rationale behind mergers and acquisitions; 2) Studies on the overall economic impact of
M&A; 3) Studies on the economic impact of mergers and acquisitions with particular reference to profitability, growth
& size of firms, and concentration of firms. Further, the paper attempts to draw gaps in the current literature and also
emphasizes more research in the field of M&As with respect to micro-economics. Moreover, the paper provides some
valuable recommendations regarding M&As in the Indian context.

REVIEW OF LITERATURE

Studies on the rationale behind Mergers and Acquisitions

In the last two decades, there have been many reasons for mergers and [Link] motive for a company's merger
and acquisition is considered to be a significant factor in its success or failure. Many authors have emphasized, it is very
crucial for firms to identify the motives behind M&A so that can evaluate the post-merger changes according to various
parameters (Kumar and Rajib, 2007; Tripathi and Lamba, 2014; Hassan et al. 2018). To identify the reasons behind
M&As, many researchers have conducted in-depth theoretical and empirical studies. In the same notion Seth, Song and
Pettit (2000) studied the causes cross border acquisitions taking in consideration 100 US firms‟ acquisitions by foreign
firms during 1981-1990 and found synergy as the major motive behind such takeovers showing positive total gains.

Even in Indian perspective, the motives and trends in M&A activities have mainly been driven by synergy during the
post liberalization period from 1990-1991 to 2000-2001. In their study, Kar&Soni (2007) examined 15 mergers in this
period and found that in addition to synergy as a motive, Indian firms prefer to expand through horizontal and vertical
mergers to achieve growth and expansion, maintain a strong brand presence, improve human resources, and establish
global identity and leadership within the local and global markets. Furthermore, Indian firms had been seen to move
from uncompetitive, fragmented structures pre-merger to more consolidated, competitive, and operationally viable
business units after mergers, which in turn enhanced efficiency and better utilization of assets due to synergistic gains
(Ramakrishnan, 2008). In addition to operative synergy, it has been noted that subsidiary companies often merge with
their parent companies for consolidation and to adapt to changing regulatory business environments (Rani [Link]., 2012).
Even in markets outside India, it has been seen that for both bidding firms and non-bidding firms, synergy is the
common motive with hubris behavior being the dominant motive in case of the latter (Akhtar, 2014). Even though some
authors have denied synergy while determining the key factors behind merger and acquisition (Mueller and Sirower,
2003) but the four famous hypotheses namely the synergy hypothesis, the hubris hypothesis, the market for corporate
control hypothesis and the managerial discretion (agency) hypothesis hold true in every case of M&As in some way or
the other.

The literature depicts that synergy is one of the major motives of M&As but other motives have also been seen during
the recent era of globalization. [Link] growth in businesses, a greater access to a capital market that would lead to less
cost of capital in future, the development of various economic scales through M&A, to reach out to new markets, to get
better access to natural resources, to reduce the costs and also to improve the raw materials for manufacturers, to meet
new technologies and better skilled manpower etc.

Economic impact of M&As-A study

Mcdougal (1995) has suggested that studies concerning M&A are broadly based on two approaches, viz. the financial
approach and the industrial approach. The financial approach examines and evaluates the trends in the share prices of
corporations involved in mergers or acquisitions and compares them to a reference group of corporations. Stock
markets seem to consider the merger and acquisition as positive when returns to shareholders are greater in the post-
merger& acquisition. On the other hand the industrial organization approach is more focused on examining the financial
and economic variables with respect to performance of any firm during pre and post-merger and acquisition. The
present review is oriented majorly towards economic impact of M&As on Indian firms and hence adopts the second
category for the review of literature i.e. the industrial organization approach.

In this perspective, the research could be dated back to 1996 when Galletestimated the degree of market power from a
system of demand and supply equations employing New Empirical Industrial Organization (NEIO) to identify the
interrelationship between merger of US steel industries and the market power. The results revealed an interesting
pattern of mergers which pointed out to the fact that mergers from 1968 to 1971 did not have a significant impact on
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market power in the steel industry but the mergers taking place from 1978 to1983 boosted the market power up to
some extent. Authors later started to investigate the impact of M&As by comparing the performance of the firms
during pre and post-merger with respect to various parameters like growth, size and profitability (Gupta and Ruhani
1999; Pazarskis et al. 2006; Kumar 2009; Mishra & Chandra 2010); solvency (Ooghe et al. 2005; Ismail 2010);
liquidly, risk, leverage (Appelbaum et al. 2000; Pawaskar 2001; Camerlynck et al. 2005; Khurana and Warne 2014);.

The results of these studies give a mixed picture of the impact of M&As in terms of the above mentioned parameters.
Gupta and Ruhani (1999) on analyzing Malaysian takeovers between 1980-1993 for performance of the firms during
pre-post and post merger times reported that acquiring firms showed growth in size but the acquired firms depicted
reduced profitability while Pawaskar (2001) analyzed the effect of mergers on corporate performance in India by
comparing profitability of the companies in merged between 1992 and 1995 and found that the merging firms were at
the lower end whereas the merged firms were seen to perform better in terms of profitability. Similarly, Camerlynck
et al. (2005) analyzed 143 acquisitions cases between the periods of 1992 to 1994 in Belgium pointing out a trend of
growth in the acquiring companies‟ total assets and sales than the target companies whereas there was downfall in
their adjusted liquidities and thus have reached an increment in leverage. Besides a higher average profitability from
M&As, Ooghe et al. (2005) on analyzing 143 acquisitions between 1992-1994 depicted the negative impact of
M&Ason solvencies and liquidity ratio of the acquiring companies while on evaluating the impact of 15 M&As
performed between 1998-2002 in Greece by Pazarskis et al. (2006) depicted a decrease in company profitability due
to the [Link] et al. (2010) framed a study to examine the operating performance of M&A activities of a sample
of Egyptian companies between the periods of 1996 to 2003.

The outcome of the study depicts that out of many parameters of corporate performance, profitability showed
significance in post M&As whereas liquidity, solvency and cash flow position were found to be statistically
insignificant in long run whereas Leepsa& Mishra (2012) examined the effects on post-merger performance of 115
companies dealing in service sector in India (except for banking and finance) reported an overall improvement in the
financial performance of the firms after merger in terms of liquidity & profitability. On a similar note, Khurana and
Warne (2014) framed a study to investigate the impact of cross border M&As taking the sample of five Tata group
companies also depicted mixed impact with a positive effect on profitability and liquidity statuses of Tata
Communication and Tata Power but Tata Motors, Tata Steel and Tata Chemicals suffered a decrease in earnings
during post-acquisition [Link] the other hand, Kumar (2009) on analyzing 30 acquiring companies involved in
M&As from1999-2002 in India found no improvement in the post-merger profitability, assets turnover and solvency
of the acquiring companies in comparison to pre- merger values while Kaur (2002) found decline in profitability
during a three-year period post-merger of 20 acquiring companies during 1997 and 2000. In many cases, it has been
observed that greater profitability is experienced by firms that are larger in size or having greater selling efforts or
higher presence in the international market or larger proportion of imported goods in the selling basket as compared
to those firms which have greater demand for products or larger dominance in the domestic market and thus M&As
do not have any significant impact on profitability of the firms in the long run (Mishra & Chandra, 2010).

Apart from this, employee stress, corporate culture, change and managing strategies are other factors that are affected
by M&A activities which could be improved by effective communication (Appelbaum et al. 2000). Many authors
have analyzed the impact of M&A on financial ratios due to M&As. In this notion, Tambi (2005) attempted to
evaluate the impact of M&As on 40 Indian companies selected from CMIE‟s PROWESS with respect to Profit before
interest, taxes, depreciation and amortization (PBITDA), Profit After Tax (PAT) and Return on capital employed
(ROCE) during the post M&A period and found the M&As to be a failure in contributing positively towards
performance improvement in the post merger period. Furthermore, on examination of the risk-adjusted profitability of
merger arbitrage in 193 M&A bids from Australia from January 1991 to April 2000 by Maheswaran&Yeoh (2005)
depicted that merger arbitrage generates statistically as well as economically significant excess risk-adjusted returns
before transaction costs.

On similar grounds, Kar and Soni (2010) evaluated the impact of M&A activity in the post liberalization period from
1990-1991 to 2000-2001on performance of Indian corporate enterprises and reported no significant impact on return
on net worth (RONW) for the chosen period of study till 1999 which lead to growth and attainment of better market
share by increasing the turnover, the profit after tax and book value of the companies throughout the entire post-
mergerperiod but interestingly after 1999 there was no significant change of M&As in these variables but the return
on net worth was unaffected by M&As for the entire period of [Link] the same note, no significant change in the
financial ratios in the post-merger era was observed by Ansari & Mustafa (2018) while studying the impact of M&As
on the financial performance of corporate sector in India taking a sample of 6 companies that had underwent M&A
during 2012- 2017. Besides, the M&As have depicted higher abnormal returns were created by diversifying
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acquisitions to acquirers as compared with focused acquisitions. It was found on investigating the impact of M&As
on acquiring Turkish enterprises during the period of 2000 to 2011(Selcuk and Kiymaz,2013).

Furthermore many authors have also evaluated the impact of operating performances as a reason of M&A activities
like evaluation of 54 domestic and cross-border M&As occurring between 2000-2007 on the company performances
by Saboo et al. (2009) showed an improvement of operating performance of the merged company in case of domestic
mergers whereas no such improvement was seen with cross-border M&A activities. Liu et al. (2007) has also made an
attempt to evaluate the operating performance of 60 companies between 1999-2000 and reported no increase in
company‟s overall performance but betterment of internal growth lead to improvement in company‟s operating
performance after M&As while Mantravadi& Reddy (2008) reported no major variation in terms of impact of M&A
activities on operating performance of public limited and traded companies in India undergoing M&s between 1991
and 2003.

Many authors have taken into consideration the M&A activity taking place in airline industries. In this reference,
Ahmed &Mahfooz (2009) conducted a case study to analyze the M&A activity between Jet Airways and Kingfisher
Airlines and found that the merger helped in elimination of competition by working on common grounds which
ultimately reduces air fares and help in meeting up the losses faced by both the companies through code share
agreements while Daddikar and Shaikh (2014) conducted a study for comparative analysis of the pre and post M&A
of the Jet Airways in terms of financial performance and found no rise in the net profit margin, return on equity and
interest coverage after M&A.

Other than this, authors have also reported underperformance in cash financed acquisitions in both short and long run
(Yang et al. 2019) and also have mentioned factors like target and bidder characteristics, the target‟s liquidity;
research and development (R&D) expenses; product market competition; acquisition percentage; voluntary
disclosure; market prices and valuation; common and shared auditor between acquirer and target; and auditor size
(Faff et al. 2019). Thus it could be concluded from this section of the literature that the impact of M&As is dependent
on various factors and their economic and financial impact also vary as per the pre-merger status of the companies
under union.

An examination on economic impact of M&As with special emphasis to microeconomic factors

Some researchers in past have made efforts to analyze the impact of M&As taking into factors micro-economic
variables. As microeconomics has always been used for giving a vivid picture about the forces that affects various
aspects of firms, thus examining the micro-economic factors with respect to M&As is an important aspect of research
in this area. In this context, Ijiri and Simon (1974) empirically analyzed the impact of M&As on the firm size
distribution by comparing firm size distributions in 1956 and in 1957 taking a sample of large American firms with
respect to concentration measure β i.e. the slope of the Pareto curve. The results indicated M&As did not greatly
affect β which is indicative of the fact that the proposition that firm growth due to M&As would follow Gibrat‟s Law
to the same extent as would internal growth because any growth of the firms in question takes the form of a parallel
upward shift in the (partial) firm size distribution, is applicable to all firms in the relevant population, regardless of
size. Similarly, Muller (1976) analyzed the effect of M&Ason industrial concentration in 11 West German industries
that underwent M&As during 1958-71. On comparing minimal vs. actual concentration ratios, the authors found the
level of concentration was quite high and did not decreased due to M&As. The authors also reported that external
growth through mergers is closely related to changes in industrial [Link] was also proved by Kandžija et
al. (2014) that concentration ratio and company‟s performance after M&A are both related after performing an
empirical research taking in account 598 companies undergoing M&A during 1998-2006.

This fact was also validated by Zhang et al. (2009) who have reported an increase in concentration due to increase in
multimarket contact after the M&A process of two major Chinese airlines during the period 2002–2004. Thus, M&As
are seen to be the biggest role player in terms of variance of the growth as well as concentration of firms. On studying
populations of firms in manufacturing and operating from the UK, Hannah and Kay, 1977found that the effects of
merger on growth are very strong and also reported that without mergers, smaller firms would have grown faster than
larger firms. The authors also reported that if there were no mergers, the higher degree of diversification that is so
characteristic of large firms would lead to a lower degree of dispersion of growth rates and feasibility of an
acquisition in terms of size will be dependent on the existing size of the acquiring [Link] et al. 2008 has
mentioned a shift of the firm size distribution towards larger sizes due to M&As in which the firm size distribution
becomes more concentrated around the mean, less skewed to the right hand side, and thinner at the tails as a whole.
The authors on analyzing shape of the firm size distribution, by using data of the population of 62,662 manufacturing
firms in the Netherlands from 1993-1999 found that only internal growth does not affect the shape of the size
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distribution of firms but the external growth of the firms is the major reason behind change in the size
[Link], Burghardt et al. (2015) used Swiss Business Census („„BFS Betriebsza¨hlung‟‟) to study firm
growth in the course of mergers and acquisitions taking into consideration 5,389 establishments that were acquired by
another firm in last four years till 2001 and found that combined size of the newly acquired establishments is
negatively related to its growth which means the relative size of a deal is an important determinant for the internal
growth of a newly acquired firm‟s [Link] &Sornette 2017 has provided a flexible approach and holistic
understanding of the distribution of firm sizes due to M&A by analyzing the effect of mergers and acquisitions on the
firm size distribution in terms of an integro-differential equation that gave an analytical and numerical view on the
fact that M&A has a significant influence on the firm size distribution in long run. Similarly, other authors like Zhang
et al. (2018) has reported that firm growth, firm size, and firm age have a positive impact on firms' performance in the
post M&A period whereas corporate governance, firm property right, and firm solvency had shown no impact on firm
performance during post M&A period by analyzing the performance for 148 Chinese pharmaceutical firms involved
in M&As from 2008 to 2016. In another recent study for estimating the impact of M&As taking into consideration
both firms that targeted or are the target of, an acquisition applying a matching procedure to obtain database of more
than 800 firms by Méndez-Ortega &Teruel, (2020) it was found that the effects of M&As are heterogeneous as the
acquiring companies significantly increase their sales growth, while the acquired companies increase their
productivity growth and the impact of acquisitions is greatest in the upper percentiles of the conditional growth
distribution.

Other than growth size and concentration, authors have used profitability as the ultimate measure for the success of
M&As. Gugler et al. (2003) conducted a large cross national assessment of the effects of mergers on profitability
using ordinary least square estimation technique for analyzing M&A data sample of 14269 M&A deals from different
countries for the time period of 1981–1998 denoting that 56.7% of all mergers resulted in increase in profitability
whereas the rest of the mergers showed lowered profitability, such differences in profitability was caused due to
variation in market power. Similarly, Singh and Mogla (2008) has reported a significant decline in the profitability
after the mergers 153 companies of Indian origin merged during the years of 1994 and 2002. Profitability posts M&A
is not solely dependent on the M&A process but is also type of industries that are merged. In this regards, Conyon et
al. (2011) has conducted a systematic empirical analysis of the effects of M&A activity on profitability of various
firms of UK, using a specially constructed database for the period 1979-1991 and found that firms that merge within
the same industry division experience larger increases in profitability as they pay their workers higher wages than
those engaged in unrelated acquisitions.

In Indian context, the introduction of large-scale deregulatory policy measures in the 1990s and three prominent
amendments made to the Indian Patent Act (1970) in 1999, 2002 and 2005 led to increase in M&A activity during this
period and on analyzing a set of 52 listed drugs and pharmaceutical companies which had underwent M&A activity
under the influence this policy during the period from 2005 to 2010 showed that even in India the impact on
profitability due to M&Ais accompanied by various other factors like selling efforts, size, and exports and imports
intensities but inversely on their market share and demand for the products (Ghatak et al. 2012). Višić 2013 has also
reported that it is possible to get significantly different impacts of M&As on profitability, using the same sample and
the same reference period due to the influence of segmentation of the companies on the basis of industry and country
of an acquirer and a [Link], to numerically validate the impact of M&As on profitability; Poornima and
Subhashini (2013) used paired sample t-test method to examine the performance of 33 merged companies for the time
period 2009–2010 in India by taking into consideration the profitability ratio, the leverage ratio, the liquidity ratio,
and the managerial efficiency ratio to carry out a comparative empirical analysis for the of pre and post-merger
performance of the firms and found no significant improvement in the profitability or any other financial ratio of the
firms after M&A. While Ahmed and Ahmed (2014) took sample of 12 manufacturing companies of Pakistan that
merged during 2000-2009 and analyzed 3 years pre and post-merger impact of M&As on factors like profitability,
liquidity, efficiency performance, capital performance using paired sample test statistics and found the liquidity,
profitability and capital position significantly improved in post-merger period in case of M&As in cement,
electronics, motor vehicles and Sugar industries had but in case of textile industry M&A led to decline in profitability.
Thus, it could be noted that M&A has impact on profitability but it is dependent on various other factors as well.

The above stated fact may be one of the reasons for thedisparity of the impact of M&A on profitability. Some
researchers have reported insignificant impact of M&A on profitability while others have mentioned positive impacts.
Some of the such prominent studies are discussed here. Duggal(2015) conducted a study depicting the impact of M&As
on the operating and financial performance of Indian pharmaceutical companies listed on the BSE from the period
2000-2006 by analyzing profitability at various periods post M&A which depicted an interesting trend of improved
profitability up-to 1 year of M&A but the improvement could not sustain longer than one year which is indicative of
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the fact that the positive impact of M&As on profitability occurs only in short run. Perven et al. 2015 analyzed the
influence of M&A activity on 116 companies that were acquired between 2008 and 2011 in European area i.e.
Croatia and found no statistically significant differences between pre-merger and post-merger companies' profitability
while Al-Hroot, 2016examined the profitability, efficiency, liquidity, leverage and market prospect variables in the
post-merger period for 7 firms of Jordanian industrial companies undergoing M&A from 2000 to 2014 also found an
insignificant improvement ofpost-merger profitability, liquidity and market prospect performance for these industries.

On similar note;Sharma, 2016also studied the impact of merger on profitability, liquidity and leverage for nine BSE
listed companies of metal industry that underwent M&A during the year 2009-10 to assess the difference in
performance between post-merger and pre-merger periods and found also found insignificant improvement of liquidity
and leverage but there was a significant decline in RONW and ROA and thus profitability which were is in contrary to
the previous [Link], (2017) has also reported no significant impact of M&As in pre and post-event based
on the various profitability ratios taking into consideration eight pharmaceutical companies listed under BSE which
were involved in M&A activities post great recession of 2007. Similar non significant change in profitability ratios due
M&A was also seen in the case of an empirical study conducted by Raseed&Naeem, (2017) taking into consideration
25 companies of Pakistan merged during 1995 to 2012. But in some cases authors have reported a positive change in
the merger and acquisitions on the financial performance of selected acquirer firms like Gupta & Banerjee, 2017
reported such positive change in seven different Indian origin industries that had undergone M&As during 2006-2012.
Similarly Aggrawal& Garg (2019) also found positive impact of M&A on analyzing the data of 68 mergers during the
year 2007- 08 & 2011-12. The study also indicated that service sector firms have performed better than manufacturing
firms.

GAPS FROM THE LITERATURE REVIEW

The above literature review indicates the following shortcomings or gaps in the academic literature of M&A research
with special emphasis to micro-economic factors. It is vivid from the literature review that the overall review of the
M&A literature shows that despite the immense interest in this field since 1980s, there is a lack of consensus on the
impact of M&A. Many studies have attempted to analyze and quantify the costs and benefits of mergers and
acquisitions considering many indicators (financial, economic etc.) but the conclusions reached by these studies are so
diverse that it is impossible to arrive at a clear, unequivocal opinion.A lack of diversity in research in this stream for
developing countries as compared markets of developed countries was also observed in the literature review. More
precisely, the literature in these following subheadings in terms of the markets of underdeveloped countries seems
silent and scattered and thus lacks specificity:

i. Research on the role of corporate innovation, cultural dimensions and influence of governance mechanisms
on M&A
ii. Research on growth of M&A linkages with institutional, government structure and country-specific factors
has been quite untouched specifically for Asian markets.
iii. Research on impact of M&As on various microeconomics factors is also scarce.
iv. Research to investigate the motives behind cross-border M&As especially in terms of the market of
developing countries is still not robust enough to draw a concrete conclusion.

Another gap that could be identified from the literature is that research on impact of M&As for financial institutions is
ample due to easy availability of data sets for analysis but research on M&As in non-financial organizations is very
less. In the same notion on literature,comparative analysis of M&A activities for various industries in different sectors
is also not [Link] another important drawback that could be identified from the existing literature on M&A
activity for non-financial organizations is that impact of M&As on macro-economic factors are prevalent but studies
specifically dealing with micro-economic factors is scarce too. Besides the scarce literature in microeconomic factors
, some attempts have been made to analyze the impact of M&A with reference to profitability but a very little effort
has been made to understand the impact of M&As on growth & size of firms, concentration etc. Furthermore there is
no such coherent theory that would predict such effects using a single model. The reason might be that it is indeed
difficult to capture all relevant mechanisms within a single theoretical model.

INSIGHT OF M&A LITERATURE IN CONTEXT TO INDIA &RESEARCH RECCOMENDATIONS

The literature of the previous researches indicates that academic research with respect to Indian firm have studied
taking into consideration various aspects like motivations for mergers, returns to stock holders on merger
announcements, government policy and regulations, corporate governance, insider trading, foreign investments through
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acquisition route [Link] very few studies have analyzedthe socio-economic impact of mergers or the impact of M&As
on operating performance of acquiring firms. It has also been seen that the sample size taken for analyzing impact of
M&As in India n context is too small like data of contemporary firms or are very short term. Other than this empirical
testing of corporate performance during the post merger period for Indian companies and its comparison with the pre
merger times is very limited in Indian context. This opens up a new horizon of research in this field. Even though M&A
has been one of those topics that has is gaining popularity in the current market but researches focusing on economic
impacts of M&Atypes, period of M&A, M&A in different industries, for different sizes of merging and merged firms
has been paid least attention in Indian context.

Therefore, there is a huge scope of research in the field of M&A with reference to Indian firms. The horizon of research
in this field is not just limited to unidirectional approach but there is a need for multi-directional research with special
emphasis to the changing market. Given below are few recommendations in this regards:

 Evaluation of the effects of M&A on micro economic variables of a firm on a long term basis and evaluation of the
impact on society at a large.
 Research focused on competition policies in the country, government regulation, issues in corporate governance
like effectiveness of SEBI‟s take-over code and its overall impact on M&A activities in the country.
 Analysis of controlling foreign investments as the motive behind M&A of Indian companies by foreign corporate
and its impact in the contribution of Foreign Direct Investments (FDI) in India
 Analytical research onrationale behind multiple mergers which is trend observed in firms of developing countries
like India in recent years.

REFERENCES

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Acquiring Firms in India” Global Business Review. 097215091985200. 10.1177/0972150919852009.
[2]. Ahmed M., Ahmed Z. (2014)“Mergers and acquisitions: Effect on financial performance of manufacturing
companies of Pakistan”, Middle-East Journal of Scientific Research, 21 (4), pp. 706-716
[3]. Ahmed S. & Mahfooz Y.(2009) “Consolidation in the Sky - A Case Study on the Quest for Supremacy
between Jetlite and Kingfisher Airlines”, Working paper series Aligarh Muslim University.
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