Authors : R. Lokande Sheetal and R. Rashmi
Abstract: Mergers and Acquisitions is a corporate strategy which fetch synergy benefits, accelerate growth, improves performance quality, acquire technology and skills and eliminate excess capacity pertaining to the business. Automobile is one of the fastest growing industry worldwide. Automobile industry has witnessed major growth in mergers and acquisitions from 2000 till 2020 worldwide. To study the share prices behaviour and the impact three analysis and methods are used and those are Market study method using technical analysis using the indicator, event-study method by computing Cumulative Abnormal Returns (CAR) and Developing GARCH Model. In order to analyse the impact of mergers and acquisition on the CAR, the Cumulative Abnormal Return (CAR) is computed for the merger and acquiring companies using two event windows and they are -31 days (-15, 0, +15) and 7 days (-3, 0, +3). t-statistics is computed to analyse whether there is significant impact or insignificant impact. The expected return on the stock for each day was calculated using CAPM Model. To analyse the stock price behaviour, Autoregressive Conditional Heteroskedasticity (ARCH) Model is used. Results and outcome revealed that there was remarkable effect and unremarkable effect on the abnormal return of mergers and acquisitions.
R. Lokande Sheetal and R. Rashmi, 2020. Impact of Mergers and Acquisitions on Stock Price Behaviour of Merger and Acquirer Companies in Automobile Industry. Research Journal of Applied Sciences, 15: 223-233.