Pre and Post Merger Corporate Financial Performance: An Analytical Study in Indian Context

Abstract

The study aims to analyses the impact of Merger & Acquisition (M&A) on corporate financial performance in India during the 5 years pre-merger and 10 years post-merger period based on key determinants of financial ratios. The sample consists of 41 companies across 09 major industries. For the purpose of this study, only companies that underwent M&A activity during the period from 2005 to 2008 have been considered. Secondary data and sources have been used for data analysis. Apart from ratio analysis, descriptive statistics and paired t-test have also been used. The study found that the top performing industries include Cement industry, Pharmaceuticals Industry, Iron and Steel Industries & Chemical and Fertilizer Industries whereas the bottom performing industries include Textile Industry, IT and Telecommunications Industries, Oil and Refineries Industries & Iron and Steel Industries. The analysis reveals that all the hypotheses framed for testing are neither fully accepted nor fully rejected for all the selected industries with respect to all parameters taken for examining the impact on corporate performance. Industry-wise, statistically significant or insignificant improvement in respect to individual ratios has been reported. It reveals no significant change in the post-merger scenario.