AN EVENT STUDY ON THE REACTION OF STOCK RETURNS TO MERGER ANNOUNCEMENTS: A SPECIAL REFERENCE TO BANK OF BARODA, DENA BANK, & VIJAYA BANK MERGER
A company’s share price is a function of two components namely fundamental business performance and investor expectations. Numerous enterprises globally indulge in Mergers & Acquisitions activities in order to gain various benefits. Investors revise their expectations on the stocksof firms engaged in M&A. This paper investigates stock price behaviour of Bank of Baroda, Vijaya Bank (two strong banks) and Dena Bank (weak bank) pre and post-Merger announcement during the period of time called an event window.The findings show that the market is efficient in absorbing the new information of announcement of merger by the Government as the Abnormal returns of all the participants changed immediately after the announcement. There is a negative Cumulative Abnormal return for Bank of Baroda and Vijaya Bank stocks, although Dena Bank stock shows a positive Cumulative abnormal return.
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