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Abstract
Merger is an expansion strategy whereby corporates engage in buying other companies in related or unrelated industries to enhance their value. This study discusses different sources of information about merger deals. This present study also analyses the investor's perception about mergers. This study is based on primary data. Data has been collected from 513 equity investors. The statistical tools such as simple mean, frequency analysis, cluster analysis, discriminant analysis, chi-square test, correspondence analysis, ANOVA, post-hoc analysis and canonical correlation have been applied to analyse the data. This study reveals that the non-shareholder acquires information about mergers through print and electronic media. This study also reveals that investors feel that merger deals are absolutely necessary. The number of family members who have invested in share market exercises the maximum influence on investors' perception about mergers.
Keywords: Investors, Mergers, Media, Motives.
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1. Introduction
Merger symbolises legal combination of two or more corporates engaged in related or unrelated business. Acquisition signifies the corporate action of a company gaining control over assets and management of another corporate entity. Generally, companies engage in mergers and acquisitions (M&A) with the following objectives:
1. To face cut-throat competition prevalent in the related market;
2. To minimise risk;
3. To bring about changes in activities of the firms;
4. To utilise surplus finance available with companies by investing in profitable projects.
Though M&A is an old phenomenon prevalent in India from the age old days, its popularity was overshadowed. Very few business entities in the past undertook M&A deals and those who succeeded in striking such a deal accomplished it through friendly acquisition deals struck to take advantage of taxation laws. This trend continued till 1991 as the Indian corporates were under the strict preview and control of the Indian Government till then.
Their corporate restructuring decisions were strictly monitored and controlled by the Government through various legislations. However, the liberalisation era sparkled since 1991 and the subsequent liberal industrial policy of the Government paved the way for M&A waves in India (Vyas et al. 2012).
2. Review of Literature
Namvar & Phillips (2013) have examined the cross sectional variation determinants in the performance of mutual fund mergers and have found that mutual fund merger yields...