IDEAS home Printed from https://ideas.repec.org/a/eco/journ1/2021-05-1.html
   My bibliography  Save this article

Flagging Determinants for Indian Outbound M&A

Author

Listed:
  • Sheeba Kapil

    (Finance, Indian Institute of Foreign Trade, Ministry of Commerce, Delhi, India)

  • Puneet Kaur Dhingra

    (Research Scholar, Indian Institute of Foreign Trade, Ministry of Commerce, Delhi, India.)

Abstract

Indian enterprises have succeeded in climbing the ladder of outward M&A transactions and out performing everyone s expectations post 1990s. This paper aims to recalibrate the empirical literature of India s outbound M&A by considering the impact of host market size, appreciation in home currency, India s trade openness and liberalization policies. This study attempts to examine the impact of the host market size, home international reserves and trade openness along with home currency appreciation on the volume of the outbound M&A by Indian firms, using augmented autoregressive distributed lag (augmented ARDL) bounds testing approach. Findings reveal that appreciation of Indian rupee and liberal norms towards trade, i.e. import and export both will inevitably benefit or push the Indian firms to acquire foreign firms overseas, in the short term as well as over the long term. This paper makes an effort to identify and describe the significant factors influencing the outbound M&A deals by Indian firms in the recent years, which were previously proved relevant for group of emerging economies at large.

Suggested Citation

  • Sheeba Kapil & Puneet Kaur Dhingra, 2021. "Flagging Determinants for Indian Outbound M&A," International Journal of Economics and Financial Issues, Econjournals, vol. 11(5), pages 1-10.
    • Handle: RePEc:eco:journ1:2021-05-1
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijefi/article/download/11715/pdf
    Download Restriction: no
    File URL: https://www.econjournals.com/index.php/ijefi/article/view/11715/pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    2. Benassy-Quere, AgnEs & Fontagne, Lionel & LahrEche-Revil, Amina, 2001. "Exchange-Rate Strategies in the Competition for Attracting Foreign Direct Investment," Journal of the Japanese and International Economies, Elsevier, vol. 15(2), pages 178-198, June.
    3. Pantelis Pantelidis & Dimitrios Kyrkilis, 2005. "A cross country analysis of outward foreign direct investment patterns," International Journal of Social Economics, Emerald Group Publishing, vol. 32(6), pages 510-519, June.
    4. Jaya Prakash Pradhan, 2011. "Emerging Multinationals: A Comparison of Chinese and Indian Outward Foreign Direct Investment," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 3(1), pages 113-148, April.
    5. Lien, Yung-Chih & Piesse, Jenifer & Strange, Roger & Filatotchev, Igor, 2005. "The role of corporate governance in FDI decisions: Evidence from Taiwan," International Business Review, Elsevier, vol. 14(6), pages 739-763, December.
    6. Deng, Ping & Yang, Monica, 2015. "Cross-border mergers and acquisitions by emerging market firms: A comparative investigation," International Business Review, Elsevier, vol. 24(1), pages 157-172.
    7. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    8. Dunning, John H, 1973. "The Determinants of International Production," Oxford Economic Papers, Oxford University Press, vol. 25(3), pages 289-336, November.
    9. Khondoker Abdul Mottaleb & Kaliappa Kalirajan, 2010. "Determinants of Foreign Direct Investment in Developing Countries: A Comparative Analysis," ASARC Working Papers 2010-13, The Australian National University, Australia South Asia Research Centre.
    10. Dunning, John H., 1994. "Multinational enterprises and the globalization of innovatory capacity," Research Policy, Elsevier, vol. 23(1), pages 67-88, January.
    11. Bahmani-Oskooee, Mohsen & Bohl, Martin T., 2000. "German monetary unification and the stability of the German M3 money demand function," Economics Letters, Elsevier, vol. 66(2), pages 203-208, February.
    12. Khondoker Abdul Mottaleb & Kaliappa Kalirajan, 2010. "Determinants of Foreign Direct Investment in Developing Countries," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 4(4), pages 369-404, November.
    13. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    14. Reddy, Kotapati Srinivasa, 2015. "Determinants of Cross-border Mergers and Acquisitions: A Comprehensive Review and Future Direction," MPRA Paper 63969, University Library of Munich, Germany, revised 2015.
    15. Yadong Luo & Rosalie L Tung, 2007. "International expansion of emerging market enterprises: A springboard perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(4), pages 481-498, July.
    16. Bruce Blonigen, 2005. "A Review of the Empirical Literature on FDI Determinants," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 33(4), pages 383-403, December.
    17. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    18. Niti Bhasin & Shilpa Garg, 2020. "Impact of Institutional Environment on Inward FDI: A Case of Select Emerging Market Economies," Global Business Review, International Management Institute, vol. 21(5), pages 1279-1301, October.
    19. Anthony Scaperlanda, 1992. "Direct Investment Controls and International Equilibrium: The U.S. Experience," Eastern Economic Journal, Eastern Economic Association, vol. 18(2), pages 157-170, Spring.
    20. Robert Z. Aliber, 1970. "Speculation In The Flexible Exchange Revisited," Kyklos, Wiley Blackwell, vol. 23(2), pages 303-314, May.
    21. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    22. Avik Chakrabarti, 2001. "The Determinants of Foreign Direct Investments: Sensitivity Analyses of Cross‐Country Regressions," Kyklos, Wiley Blackwell, vol. 54(1), pages 89-114, February.
    23. repec:bla:kyklos:v:23:y:1970:i:2:p:303-14 is not listed on IDEAS
    24. Sumati Varma & Niti Bhasin & Rishika Nayyar, 2015. "Motives as Locational Determinants: A Study of FDI between India and LAC," Transnational Corporations Review, Ottawa United Learning Academy, vol. 7(3), pages 335-352, September.
    25. Zhou, Kexuan & Kumar, Sanjay & Yu, Linhui & Jiang, Xinlin, 2021. "The economic policy uncertainty and the choice of entry mode of outward foreign direct investment: Cross-border M&A or Greenfield Investment," Journal of Asian Economics, Elsevier, vol. 74(C).
    26. Malhotra, Shavin & Sivakumar, K. & Zhu, PengCheng, 2011. "Curvilinear relationship between cultural distance and equity participation: An empirical analysis of cross-border acquisitions," Journal of International Management, Elsevier, vol. 17(4), pages 316-332.
    27. Kayam, Saime Suna, 2009. "Home market determinants of FDI outflows from developing and transition economies," MPRA Paper 16781, University Library of Munich, Germany.
    28. Goh, Soo Khoon & Wong, Koi Nyen, 2011. "Malaysia's outward FDI: The effects of market size and government policy," Journal of Policy Modeling, Elsevier, vol. 33(3), pages 497-510, May.
    29. Peter J Buckley & L Jeremy Clegg & Adam R Cross & Xin Liu & Hinrich Voss & Ping Zheng, 2007. "The determinants of Chinese outward foreign direct investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(4), pages 499-518, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yanyan Lin & Xipei Hou, 2024. "Stock market liberalisation and acquisition outcomes: Evidence from a natural experiment," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 3344-3371, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chien-Chiang Lee & Chun-Ping Chang, 2006. "The Long-Run Relationship Between Defence Expenditures And Gdp In Taiwan," Defence and Peace Economics, Taylor & Francis Journals, vol. 17(4), pages 361-385.
    2. Yin, Tong & De Propris, Lisa & Jabbour, Liza, 2021. "Assessing the effects of policies on China’s outward foreign direct investment," International Business Review, Elsevier, vol. 30(5).
    3. Nayyar, Rishika & Mukherjee, Jaydeep, 2020. "Home country impact on Outward FDI from India," Journal of Policy Modeling, Elsevier, vol. 42(2), pages 385-400.
    4. Sheeba Kapil & Kaur Dhingra, 2022. "Unveiling Influence Of Home Macroeconomic Factors On Indian Outbound M&A," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 29, pages 9-28, June.
    5. Ketenci, Natalya, 2009. "The ARDL Approach to Cointegration Analysis of Tourism Demand in Turkey: with Greece as the substitution destination," MPRA Paper 86602, University Library of Munich, Germany.
    6. Bashiri Behmiri, Niaz & Pires Manso, José R., 2012. "Does Portuguese economy support crude oil conservation hypothesis?," Energy Policy, Elsevier, vol. 45(C), pages 628-634.
    7. Sulaiman, Saidu & Masih, Mansur, 2017. "Is liberalizing finance the game in town for Nigeria ?," MPRA Paper 95569, University Library of Munich, Germany.
    8. Sari, Ramazan & Ewing, Bradley T. & Soytas, Ugur, 2008. "The relationship between disaggregate energy consumption and industrial production in the United States: An ARDL approach," Energy Economics, Elsevier, vol. 30(5), pages 2302-2313, September.
    9. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
    10. Matallah, Siham & Zerigui, Khadidja & Matallah, Amal, 2024. "Renewable energy solutions to the lack of access to electricity in conflict-ridden countries: A case study of Yemen," Energy, Elsevier, vol. 296(C).
    11. Chen, George S. & Yao, Yao & Malizard, Julien, 2017. "Does foreign direct investment crowd in or crowd out private domestic investment in China? The effect of entry mode," Economic Modelling, Elsevier, vol. 61(C), pages 409-419.
    12. Nurudeen Abu, 2017. "Does Okun’s Law Exist in Nigeria? Evidence from the ARDL Bounds Testing Approach," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 11(2), June.
    13. Padha, Vimarsh & Chaubal, Aditi, 2024. "Impact of global liquidity on Indian financial markets and monetary policy outcomes: An ARDL approach," Journal of Asian Economics, Elsevier, vol. 90(C).
    14. Tang, Chor Foon, 2007. "The stability of money demand function in Japan: Evidence from rolling cointegration approach," MPRA Paper 19807, University Library of Munich, Germany.
    15. Sari, Ramazan & Soytas, Ugur & Hacihasanoglu, Erk, 2011. "Do global risk perceptions influence world oil prices?," Energy Economics, Elsevier, vol. 33(3), pages 515-524, May.
    16. Kapoor, Nimisha & Ghosh, Sajal, 2014. "Long-term association between European and Indian markets on carbon credit price," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 656-662.
    17. Philip Michael Kargbo, 2012. "Impact of Foreign Aid on Economic Growth in Sierra Leone: Empirical Analysis," WIDER Working Paper Series wp-2012-007, World Institute for Development Economic Research (UNU-WIDER).
    18. Prao Yao Séraphin & Kongoza Kouassi Cyrille, 2023. "Nonlinear Effect of Financial Development on Income Inequality: The Case of Ivory Coast," International Journal of Business and Management, Canadian Center of Science and Education, vol. 17(6), pages 1-57, February.
    19. Ferda Halicioglu, 2005. "An Ardl Model Of Aggregate Tourism Demand For Turkey," International Trade 0503005, University Library of Munich, Germany.
    20. Khan, Muhammad Azhar & Khan, Muhammad Zahir & Zaman, Khalid & Irfan, Danish & Khatab, Humera, 2014. "Questing the three key growth determinants: Energy consumption, foreign direct investment and financial development in South Asia," Renewable Energy, Elsevier, vol. 68(C), pages 203-215.

    More about this item

    Keywords

    Outbound M&A; India; OFDI; Determinants;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • P45 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - International Linkages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ1:2021-05-1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.