Determinants of merger activity: evidence from India

Abstract

This study investigates the role of industry level factors in determining merger activity in an emerging economy. The study uses information from India, which has witnessed acceleration in merger activity subsequent to recent economic reforms. Departing from the existing literature, we proxy merger activity by the occurrence of mergers and the number of mergers. The results from logistic and count data regressions suggest that growth opportunity, concentration and cash flow are important determinants of merger activity. However, unlike existing studies, no evidence is found to support the role of mergers as a corporate restructuring activity in response to industry shocks.