Merger and Acquisition Impact on Shareholder Wealth: Evidence from Pakistan
Abstract
This research examines the implications of M&A's on shareholder's wealth of the Acquire banks in Pakistan. The basic objective of this research study is to analyze the shareholder wealth at the corporate, economic, and national levels. By using event study, the current study looks at any unusual returns for the shareholders of the acquired banks during the M&A announcement phase. The current study analyses 60 acquirer banks that are listed on the Pakistan Stock Exchange (PSX) betwee n 2002 and 2022 using a census sample method. Additionally, to estimate the link among dependent and independent variables, the present investigation makes use of estimators such regression analysis, paired sample t-test, diagnostic tests. By using the event study approach, the study searched for any anomalous returns for the shareholders of the acquire banks during the announcement of the M&A, which helped to explain how M&As affected the wealth of the acquire banks' shareholders in Pakistan. The study, which used a market model, discovered that the announcement of M&A deals significantly affects shareholder worth. During the M&A announcement phase, the shareholders of the acquired banks got considerable abnormal. In terms of significant determinants for shareholder's wealth of CAR, the study found that the significant determinants based on OLS models are Capital adequacy, Inflation, Exchange rate, Regularity quality, Control of Corruption, Rule of law. This study support the information asymmetry and signaling hypothesis in explaining the shareholder's wealth of the Acquire banks at country-level.
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