Target shareholders' wealth creation in domestic and cross border acquisitions in India
Purpose This paper seeks to compare target shareholders' wealth gains in domestic and cross border acquisitions in India. Two existing schools of thought namely, the industrial organizational theory and bid specific factors theory have been compared to identify which of these two theories affect the target shareholders' announcement wealth gains in India.Design/methodology/approach Standard event study methodology has been applied to compute the announcement returns for domestic and cross border acquisitions. Cross border effect is calculated to compare the value creation in the two sets of acquisitions. Furthermore, cross sectional regression analysis is conducted to capture the impact of bid related features on target shareholder's value creation.Findings The results indicate that both domestic and cross border acquisitions have created value for the target company shareholders on the announcement. Nonetheless, the analysis of cross border effect as well as regression analysis makes it evident tha.