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Impact of Merger and Acquisition on Financial Performance: Evidence from Construction and Real Estate Industry of India

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  • Isha Gupta
  • T. V. Raman
  • Naliniprava Tripathy

Abstract

This article aims to examine the impact of mergers and acquisitions (M&A) on the financial performance of the construction and real estate industry, using the broad spectrum of financial ratios. The period of study is from 2011 to 2020, and paired t -test methodology has been used. It is hypothesized that there is a significant difference in the pre-M&A period and post-M&A period. The study findings conclude that profitability ratio and liquidity ratio have improved significantly, whereas leverage ratio exhibits no change in performance. In the efficiency ratio, the fixed-assets turnover ratio substantially improves, but the total asset turnover ratio and current asset turnover ratio show a slight improvement. The study concludes that the Indian construction and real estate company’s financial performance has improved overall for the acquiring firms during the post-M&A period. The study implies that the construction sector supports the synergy hypothesis, stating that M&A will improve synergy during the post-M&A period because of the consolidation of two firms’ resources.

Suggested Citation

  • Isha Gupta & T. V. Raman & Naliniprava Tripathy, 2023. "Impact of Merger and Acquisition on Financial Performance: Evidence from Construction and Real Estate Industry of India," FIIB Business Review, , vol. 12(1), pages 74-84, March.
    • Handle: RePEc:sae:fbbsrw:v:12:y:2023:i:1:p:74-84
    DOI: 10.1177/23197145211053400
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    References listed on IDEAS

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    Cited by:

    1. Janowicz Magdalena, 2023. "The Profitability of Legal Mergers in Times of Economic Crisis – A Polish Example," Folia Oeconomica Stetinensia, Sciendo, vol. 23(2), pages 169-182, December.

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