The present paper analyzed long term performance of M&A deals in India in terms of growth in shareholder value of acquirers in real terms and compared it with growth in nominal terms. It tried to understand whether M&A deals contribute to shareholder wealth of acquirers in real terms in comparison to nominal terms. We performed sectoral as well as overall analysis of a sample of 174 deals. We analyzed performance in three ways; in the form of growth of shareholder wealth of acquirers in nominal terms, growth of shareholder wealth of acquirers in real terms, and finally, a one on one comparison of performance in nominal terms vis a vis real terms. The study covered domestic M&A deals in India over a period of 1989 to 2014 involving Bombay Stock Exchange (BSE) listed acquirers. The model used for study is BHAR (Buy and Hold Abnormal Return) and a modification of BHAR, that is, RBHAR (Real Buy and Hold Abnormal Return). We did not find any significant difference between the test results of BHAR and RBHAR on a standalone basis. However, when we compared the performance of BHAR and RBHAR on a one to one basis, we found that the performance of M&A deals in auto and IT sectors in real terms was better than in nominal terms. Overall, M&A performance in real terms was also better than that in nominal terms.

1. Agrawal, A., Jaffe, J. F., & Mandelker, G. N. (1992). The post merger performance of acquiring firms: A re-examination of an anomaly. The Journal of Finance, 47 (4), 1605 - 1621. DOI: 10.2307/2328956
2. André, P., Kooli, M., & L'Her, J. (2004). The long-run performance of mergers and acquisitions: Evidence from the Canadian stock market. Financial Management, 33(4), 27- 43.
3. Balduzzi, P. (1994). Stock returns, inflation, and the 'proxy hypothesis' : A new look at the data. Economics Letters, 48 (1), 47-53. DOI: 10.1016/0165-1765(94)00568-M
4. Barai, P., & Mohanty, P. (2014). Role of industry relatedness in performance of Indian acquirers - Long and short run effects. Asia Pacific Journal Management, 31(4), 1045 - 1073. DOI 10.1007/s10490-014-9372-1
5. Barber, B. M., & Lyon, J. D. (1997). Detecting long-run abnormal stock returns: The empirical power and specification of test statistics. Journal of Financial Economics, 43 (3), 341-372. DOI: 10.1016/S0304-405X(96)00890-2
6. Bhabra, H. S., & Huang, J. (2013). An empirical investigation of mergers and acquisitions by Chinese listed companies, 1997 - 2007. Journal of Multinational Financial Management, 23 (3), 186 - 207. doi: <a href=http://dx.doi.org/10.1016/j.mulfin.2013.03.002 target="_blank">http://dx.doi.org/10.1016/j.mulfin.2013.03.002</a>
7. Bodie, Z. (1976). Common stock as a hedge against inflation. The Journal of Finance, 31(2). Papers and Proceedings of the Thirty-fourth Annual Meeting of the American Finance Association, Dallas, Texas (pp. 459 - 470). December 28-30, 1975. DOI: 10.2307/2326617
8. Centre for Monitoring Indian Economy. (n.d.). Prowess Database. Retrieved from <a href=https://www.cmie.com/kommon/bin/sr.php?kall=wcontact&page=prowess target="_blank">https://www.cmie.com/kommon/bin/sr.php?kall=wcontact&page=prowess</a>
9. Dube, S., Francis-Gladney, L. , Romero, R., & Langdon, W.L. (2007). Merger motives for U.S. utility acquirers: Evidence from performance, risk metrics, and executive compensation. Journal of Business and Economics Research, 5(5), 49 - 62. DOI: <a href=http://dx.doi.org/10.19030/jber.v5i5.2544 target="_blank">http://dx.doi.org/10.19030/jber.v5i5.2544</a>
10. Dutta, S., & Jog, V. (2009). The long-term performance of acquiring firms: A re-examination of an anomaly. Journal of Banking & Finance, 33(8), 1400 - 1412. DOI: <a href=http://dx.doi.org/10.1016/j.jbankfin.2009.02.004 target="_blank">http://dx.doi.org/10.1016/j.jbankfin.2009.02.004</a>
11. Fama, E. F. (1981). Stock returns, real activity, inflation, and money. The American Economic Review, 71(4), 545-565.
12. FedUni. (2005). Mergers, acquisitions & corporate restructuring. The Federation of Universities, ICFAI, Study material of MS(Finance) Program of ICFAI University, Dehradun.
13. Francoeur, C. (2007). The long-run performance of cross-border mergers and acquisitions: Evidence to support the internalization theory. Corporate Ownership & Control, 4 (2), 312 - 323. doi: 10.22495/cocv4i2c2p8
14. Geetha, C., Mohidin, R., Chandran, V. V., & Chong, V. (2011). The relationship between inflation and stock market: Evidence from Malaysia, United States and China. International Journal of Economics and Management Sciences, 1 (2), 1-16.
15. Grant Thornton. (2011). Deal Tracker providing M&A and PE market insights (7th Annual Edition). Retrieved from <a href=http://www.ibef.org/download/Grant-Thornton-Dealtracker-Annual-Edition-2011.pdf target="_blank">http://www.ibef.org/download/Grant-Thornton-Dealtracker-Annual-Edition-2011.pdf</a>
16. Grant Thornton. (2013). Deal Tracker providing M&A and private equity deal insights (9th Annual Edition). Retrieved from <a href=http://gtw3.grantthornton.in/assets/Grant_Thornton_Dealtracker_Annual_edition_2013.pdf target="_blank">http://gtw3.grantthornton.in/assets/Grant_Thornton_Dealtracker_Annual_edition_2013.pdf</a>
17. Grant Thornton. (2014). Deal tracker providing you with M&A and private equity deal insights (10th Annual Edition). Retrieved from <a href=http://gtw3.grantthornton.in/assets/Grant_Thornton_Annual_dealtracker_2014.pdf target="_blank">http://gtw3.grantthornton.in/assets/Grant_Thornton_Annual_dealtracker_2014.pdf</a>
18. Gregory, A. (1997). An examination of the long run performance of UK acquiring firms. Journal of Business Finance & Accounting, 24 (7 & 8), 971 - 1002. DOI: 10.1111/1468-5957.00146
19. Ibrahim, T. M., & Agbaje, O. M. (2013). The relationship between stock return and inflation in Nigeria. European Scientific Journal, 9 (4), 146-157.
20. James, C., Koreisha, S., & Partch, M. (1985). A VARMA analysis of the causal relations among stock returns, real output, and nominal interest rates. The Journal of Finance, 40 (5), 1375-1384. DOI: 10.2307/2328119
21. Kaul, G. (1987). Stock returns and inflation: The role of the monetary sector. Journal of Financial Economics, 18 (2), 253-276. DOI: <a href=http://dx.doi.org/10.1016/0304-405X(87)90041-9 target="_blank">http://dx.doi.org/10.1016/0304-405X(87)90041-9</a>
22. Kot, H.W. (2011). Corporate name changes: Price reactions and long-run performance. Pacific-Basin Finance Journal, 19, 230 - 244.
23. Kumar, R. B. (2011). Mergers and acquisitions – Text and cases. India : Tata McGraw-Hill.
24. Kyriazopoulos, G., & Drymbetas, E. (2015). Long-term performance of acquirers involved in domestic bank Ms & As in Europe. International Journal of Financial Research, 6 (1), 56-67. DOI: <a href=http://dx.doi.org/10.5430/ijfr.v6n1p56 target="_blank">http://dx.doi.org/10.5430/ijfr.v6n1p56</a>
25. Loderer, C., & Martin, K. (1992). Post-acquisition performance of acquiring firms. Financial Management, 21 (3), 69-79. DOI: 10.2307/3666020
26. Lubatkin, M. (1987). Merger strategies and stockholder value. Strategic Management Journal, 8 (1) , 39-53. DOI: 10.1002/smj.4250080105
27. Lyon, J. D., Barber, B. M., & Tsai, C. (1999). Improved methods for tests of long-run abnormal stock returns. The Journal of Finance, 54 (1), 165-201. DOI: 10.1111/0022-1082.00101
28. Mayya, M. R. (1977). Do equities act as a hedge against inflation? Economic and Political Weekly, 12 (22), M61+M63 – M65+M67+M69 – M71.
29. Megginson, W. L., Morgan, A., & Nail, L. (2004). The determinants of positive long-term performance in strategic mergers: Corporate focus and cash. Journal of Banking & Finance, 28 (3), 523 - 552. DOI: <a href=http://dx.doi.org/10.1016/S0378-4266(02)00412-0 target="_blank">http://dx.doi.org/10.1016/S0378-4266(02)00412-0</a>
30. Mitchell, M. L., & Stafford, E. (2000). Managerial decisions and long - term stock price performance. The Journal of Business, 73 (3), 287-329. DOI: <a href=http://dx.doi.org/10.1086/209645 target="_blank">http://dx.doi.org/10.1086/209645</a>
31. Planning Commission, Govt. of India. (2014). Data-book compiled for use of Planning Commission. Retrieved from <a href=http://planningcommission.gov.in/data/datatable/data_2312/comp_data2312.pdf target="_blank">http://planningcommission.gov.in/data/datatable/data_2312/comp_data2312.pdf</a>
32. Prabhakaran, M. (1989). Do equities act as a hedge against inflation? Economic and Political Weekly, 24 (8), M24 - M26.
33. Rao, K. N., & Bhole, L. M. (1990). Inflation and equity returns. Economic and Political Weekly, 25 (21), M91 - M96.
34. Rau, P. R., & Vermaelen, T. (1998). Glamour, value and the post-acquisition performance of acquiring firms. Journal of Financial Economics, 49 (21), 223 - 253. DOI: 10.1016/S0304-405X(98)00023-3
35. Schwert, G. W. (1990). Stock returns and real activity: A century of evidence. The Journal of Finance, 45 (4), 1237-1257. DOI: 10.1111/j.1540-6261.1990.tb02434.x
36. Shanmugam, K. R., & Misra, B. S. (2008). Stock returns-inflation relation in India (Working Paper 38/2008). Madras School of Economics. Retrieved from <a href=http://www.mse.ac.in/pub/working%20paper%2038.pdf target="_blank">http://www.mse.ac.in/pub/working%20paper%2038.pdf</a>
37. Verma, B. P., Nair, S., & Maji, P. (2013). Mergers & acquisitions and their impact on corporate values: Pre and post-merger analysis of Indian banks. Indian Journal of Finance, 7(2), 5-16. doi: 10.4236/me.2014.54034
38. Wang, S., Shih, Y., & Lin, P. (2014). The long-run performance of Asian commercial bank mergers and acquisition. Modern Economy, 5 (4), 341-359. DOI: 10.4236/me.2014.54034