IDEAS home Printed from https://ideas.repec.org/a/sae/padigm/v8y2004i2p58-67.html
   My bibliography  Save this article

Post-Takeover Performance Of Target Firms In India: Empirical Evidence

Author

Listed:
  • G.S. Sood
  • Surjit Kaur

Abstract

The present study aims at analyzing the post-takeover performance of the target firms. Since the empirical results of earlier studies present a mixed picture, it is necessary to examine the effects of takeovers on operating performance, efficiency, and stock prices in the Indian context. For this purpose, the study utilized a sample of 20 companies targeted during the financial year 1997-98. The mean value of a set of eight financial ratios based on a period of three years each immediately preceding and succeeding the takeover attempt were calculated and compared. The two profitability ratios viz. EBIT/Sales and ROCE indicate a significant decline in the performance of target companies in the post- takeover period. This gets reinforced by the fact that their efficiency as measured by assets turnover ratio also declined substantially. Also, the liquidity and solvency position of these companies, as shown by current ratio, cash flow to sales and debt-equity ratio, have not shown any significant improvement. Further, the market response to these takeovers as indicated by EV/EBIDA and market price to book values also presented a dismal picture. None of these ratios was found to be significantly different in the two periods when tested in terms of the t-test.

Suggested Citation

  • G.S. Sood & Surjit Kaur, 2004. "Post-Takeover Performance Of Target Firms In India: Empirical Evidence," Paradigm, , vol. 8(2), pages 58-67, July.
    • Handle: RePEc:sae:padigm:v:8:y:2004:i:2:p:58-67
    DOI: 10.1177/0971890720040210
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0971890720040210
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0971890720040210?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    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:sae:padigm:v:8:y:2004:i:2:p:58-67. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: SAGE Publications (email available below). General contact details of provider: .

    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.