Testing Hubris Hypothesis of Mergers and Acquisitions: Evidence from India

Business and Management Quarterly Review, Vol. 3, No. 2, 2012

10 Pages Posted: 3 Oct 2012

See all articles by Aasif M.

Aasif M.

Pondicherry University

Malabika Deo

Pondicherry University - Department of Commerce

Date Written: September 30, 2012

Abstract

This paper addresses the relevance of Hubris theory of mergers and acquisitions in the Indian context. We apply event study methodology to examine the short-term market response to merger announcements in the Indian banking and information technology industry.The overall findings report interesting although not surprising results. Hubris hypothesis which states that that the shareholders of the bidding firms would incur loss on merger announcements does not hold well in the Indian perspective. Our findings demonstrate the contrary effect. The bidding firms at least do not fall in deficit from the merger deals and hence mergers and acquisitions could not be seen as a risky investment for their shareholders.

Keywords: merger, acquisition, Hubris, India

JEL Classification: G11, G34, G39

Suggested Citation

M., Aasif and Deo, Malabika, Testing Hubris Hypothesis of Mergers and Acquisitions: Evidence from India (September 30, 2012). Business and Management Quarterly Review, Vol. 3, No. 2, 2012, Available at SSRN: https://ssrn.com/abstract=2156134

Aasif M. (Contact Author)

Pondicherry University ( email )

Department of Commerce
Kanchi Mamunivar Centre for Post Graduate Studies
Pondicherry University, Tamil Nadu 605014
India
+91-8122263418 (Phone)

Malabika Deo

Pondicherry University - Department of Commerce ( email )

Department of Commerce
Kanchi Mamunivar Centre for Post Graduate Studies
Pondicherry University, Tamil Nadu 605014
India

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