Impact of Company Financials on Wealth of Indian Acquirers

Abstract

This article analyzes the effect of the various financial ratios on the long-term performance of M&A deals in India in terms of shareholder wealth of acquirers using binary logistic regression. The ratios used were Working Capital/Total Assets, Retained Earnings/Total Assets, Earnings Before Interest and Taxes/Total Assets, Market Value of Equity/Book Value of Total Debt, Total Income/Total Assets, Current Assets/Current Liabilities, Debt/Equity Ratio, and Retained Earnings/Profit after Tax. It was found that increases in average Total Income/Total Assets ratio are positively related to M&A performance.

TOPICS: Private equity, fundamental equity analysis, emerging, performance measurement