N. M. Leepsa, Chandra Sekhar Mishra
NMIMS Management Review, 31, 41-72
Publication year: 2016

Abstract

Acquirers make M&A (Mergers and Acquisitions) deals with the objective of improvement of performance and wealth creation for the company, or shareholder value creation. However, in the past literature, the performance of companies after M&A is evaluated using traditional performance measures like Return on Assets (ROA), Return on Capital Employed (ROCE), and Earning per Share (EPS); these measures do not take into account the cost of capital. Limited studies have taken into account Economic value Added (EVA), which is the true performance measure in evaluating M&A performance as it takes into account the opportunity cost. As far as M&A in Indian manufacturing companies is concerned, a limited study has been made and specifically, the performance evaluation in the industry-wise analysis is yet to be found in the literature using this new measure called EVA.