Impact of Mergers & Acquisitions Announcements on Stock Prices
DOI:
https://doi.org/10.56411/anusandhan.2024.v6i2.39-52Keywords:
Event Study Methodology, Indian Stock Market, Merger and Acquisition, Announcement, Abnormal Returns, Cumulative Average Abnormal ReturnsAbstract
This study examines the impact of M&A announcements on stock prices in India,
by utilizing event study methodology and a dataset of 15 announcements. It
identifies dynamic trends in stock performance before and after the
announcements. The Efficient Market Hypothesis (EMH), which posits that the
market incorporates all relevant information, is evident in stock price volatility.
The post-COVID-19 market environment has heightened investor caution due to
substantial losses. The research, covering M&A announcements from 2014 to
2023, uniquely contributes by analysing pre- and post-COVID investor
sentiments. Although substantial results were produced, the analysis of
Abnormal Returns (AR) and Cumulative Average Abnormal Returns (CAAR)
indicates that M&A announcements did not significantly impact overall stock
performance, thereby supporting the EMH. These findings provide valuable
insights into market responses to M&A in India, benefiting investors, business
strategists, policymakers, and other stakeholders.
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