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The IUP Journal of Accounting Research and Audit Practices:

Impact of Cross-Border M&As on Firm Performance and Financial Distress: A Study of Selected Cases from India †

Article Details

Pub. Date	: Oct, 2022
Product Name	: The IUP Journal of Accounting Research and Audit Practices
Product Type	: Article
Product Code	: IJARAP061022
Author Name	: Pallavi Julasaria and Kumarjit Mandal
Availability	: YES
Subject/Domain	: Finance
Download Format	: PDF Format
No. of Pages	: 23

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Abstract

Indian companies have participated in the worldwide trend of consolidation through cross-border mergers and acquisitions (M&As). During the last decade, there has been a sharp and consistent increase in the number of M&As in India. The paper explores the impact of cross-border M&A on firm performance and financial distress of selected cases in India from diverse sectors. The motive is to get a clear understanding as to whether the cross-border M&As actually lead to improvement in growth, profitability and efficiency of Indian corporate firms, and also whether it helps in reducing their financial distress. For this purpose, the paper has focused on a sample of nine large cross-border M&As in India from different sectors. It is found that these M&As have been effective in improving the firm performance and financial distress in some cases, whereas it has led to increased distress and reduced performance in others.

Introduction

Post globalization, there has been a large increase in cross-border mergers and acquisitions (M&As). In the 1990s there was a 200% jump in the volume of cross-border M&A deals in the Asia-Pacific Region.

Cross-border M&As have been on the rise with increased deregulation, privatization and corporate restructuring. In almost all the sectors such as services, manufacturing, chemical, pharmaceuticals, telecommunications and financial industries, cross-border M&As are taking place. A cross-border M&A occurs between two companies existing in