Subprime Crisis – A Corporate Acquisition Opportunity?

Subprime Crisis – A Corporate Acquisition Opportunity?

  • VISHAL SRIVASTAVA PhD Scholar, Under the Faculty of Management, Symbiosis Centre for Research & Innovation (SCRI), Symbiosis International University Gram: Lavale, Tal: Mulshi, Dist: Pune - 412115
  • SUNDER RAM KORIVI, Ph.D Senior Consultant, Department of Economic Affairs and National Institute of Financial Management Research Programme, Faridabad – NCR Delhi
  • DIPASHA SHARMA, Ph.D Assistant Professor, Finance Symbiosis Centre for Management & Human Resource Development, Plot No. 15, Rajiv Gandhi Infotech Park, Hinjewadi, MIDC, Dist: Pune – 411057

Abstract

Corporate acquisition can be considered as one of the best processes of corporate restructuring. This study is focused to evaluate the post-acquisition operating performance of listed Indian companies (acquirers) which have made acquisitions during subprime crisis period i.e. from FY 2007-08 to FY 2009-10. Paired sample t-test has been used on four operating performance indicators i.e. Return on Equity(ROE), Return on Assets (ROA), Operating Profit margin (OPM) and Operating Cash flow to Net Sales ratio (OCF/Net Sales) to check whether operating performance of acquirers has significantly improved post-acquisition. This study has revealed that there is no significant improvement in firms’ operating performance based on financial parameters i.e. Return on Equity (ROE), Return on Assets (ROA) and Operating Profit Margin (OPM), post corporate acquisitions made during subprime crisis period. The study finds that there was negative impact based on these parameters. Though Operating Cash Flow to Net Sales ratio has improved significantly for the companies which have made acquisition in FY 2007-08 and FY 2008-09 but similar findings could not be achieved for FY 2009-10. This study will find its significance in present scenario wherein corporate acquisitions are seen as the fastest way to achieve growth. Corporate world may derive its growth strategy from this study.   

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Author Biographies

VISHAL SRIVASTAVA, PhD Scholar, Under the Faculty of Management, Symbiosis Centre for Research & Innovation (SCRI), Symbiosis International University Gram: Lavale, Tal: Mulshi, Dist: Pune - 412115

Vishal Srivastava is a graduate in Mechanical Engineering and M.B.A. in Operations management. He is Phd Scholar under the faculty of Management at Symbiosis International (Deemed University). He has keen interest in the area of mergers & acquisitions and corporate finance. He is the corresponding author and can be contacted at: vishalsr7@gmail.com.  

SUNDER RAM KORIVI, Ph.D, Senior Consultant, Department of Economic Affairs and National Institute of Financial Management Research Programme, Faridabad – NCR Delhi

Dr. Sunder Korivi is MA (Economics & Political Science) and PhD from the University of Mumbai. He is a Fellow of the Institute of Chartered Accountants of India, Associate of the Institute of Cost & Works Accountants of India and Associate of the Insurance Institute of India. He is senior consultant at Department of Economic Affairs and NIFM Research Cell.

DIPASHA SHARMA, Ph.D, Assistant Professor, Finance Symbiosis Centre for Management & Human Resource Development, Plot No. 15, Rajiv Gandhi Infotech Park, Hinjewadi, MIDC, Dist: Pune – 411057

Dr. Dipasha Sharma holds a PhD in the area of Banking and Finance from IIT Roorkee. She teaches Financial Management and Commercial Banking. Her area of interest is in financial inclusion, risk management, modeling of banking services and financial economics. She has several publications to her credit.

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Published
2021-11-07
How to Cite
SRIVASTAVA, VISHAL; KORIVI, SUNDER RAM; SHARMA, DIPASHA. Subprime Crisis – A Corporate Acquisition Opportunity?. Journal of Accounting, Business and Management (JABM), [S.l.], v. 28, n. 2, p. 20-33, nov. 2021. ISSN 2622-2167. Available at: <http://journal.stie-mce.ac.id/index.php/jabminternational/article/view/546>. Date accessed: 08 dec. 2021. doi: https://doi.org/10.31966/jabminternational.v28i2.546.
Section
Articles