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Predicting Corporate Takeovers in India: An Empirical Analysis

Author

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  • G S Sood
  • S Kaur

Abstract

The study attempts to develop a model for predicting corporate takeovers in India. The data comprises of 37 target companies and a matching sample of control companies for the period 1997–98 to 2000–01. The study reveals that the target companies generally show a lower profit margin and ROCE with liquidity concerns being predominant for such firms. Further, such companies are tow on gearing but exhibit high valuation ratios. The model used to predict acquisitions shows moderate rate of success in the Indian context. The study has strong implications for investors and shareholders, corporate raiders and target companies, investment bankers and the regulators.

Suggested Citation

  • G S Sood & S Kaur, 2004. "Predicting Corporate Takeovers in India: An Empirical Analysis," Vision, , vol. 8(2), pages 57-67, July.
    • Handle: RePEc:sae:vision:v:8:y:2004:i:2:p:57-67
    DOI: 10.1177/097226290400800206
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    References listed on IDEAS

    as
    1. Burkart, Mike, 1995. "Initial Shareholdings and Overbidding in Takeover Contests," Journal of Finance, American Finance Association, vol. 50(5), pages 1491-1515, December.
    2. Loughran, Tim & Vijh, Anand M, 1997. "Do Long-Term Shareholders Benefit from Corporate Acquisitions?," Journal of Finance, American Finance Association, vol. 52(5), pages 1765-1790, December.
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    4. Cotter, James F. & Zenner, Marc, 1994. "How managerial wealth affects the tender offer process," Journal of Financial Economics, Elsevier, vol. 35(1), pages 63-97, February.
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    7. repec:bla:jfinan:v:53:y:1998:i:2:p:785-798 is not listed on IDEAS
    8. Franks, Julian R. & Harris, Robert S., 1989. "Shareholder wealth effects of corporate takeovers : The U.K. experience 1955-1985," Journal of Financial Economics, Elsevier, vol. 23(2), pages 225-249, August.
    9. Agrawal, Anup & Jaffe, Jeffrey F & Mandelker, Gershon N, 1992. "The Post-merger Performance of Acquiring Firms: A Re-examination of an Anomaly," Journal of Finance, American Finance Association, vol. 47(4), pages 1605-1621, September.
    10. Assem Safieddine & Sheridan Titman, 1999. "Leverage and Corporate Performance: Evidence from Unsuccessful Takeovers," Journal of Finance, American Finance Association, vol. 54(2), pages 547-580, April.
    11. Palepu, Krishna G., 1986. "Predicting takeover targets : A methodological and empirical analysis," Journal of Accounting and Economics, Elsevier, vol. 8(1), pages 3-35, March.
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