Ninth AIMS International Conference on Management
Ninth AIMS International Conference on Management
January 1-4, 2012
Impact of Foreign Direct Investment in India by way of Cross-border Mergers & Acquisitions
Bhagwan Jagwani bhagwan.jagwani@ghsimr.org Dr. Gaur Hari Singhania Institute of Management & Research, Kanpur
Over the last two decades, the share of cross-border mergers and acquisitions (CB M&As) in the global FDI inflows has been over 50%. The Indian Corporate sector too experienced a boom in this form of FDI. The increasing flows of foreign capital, especially the impressive proportion of CB M&As, raises questions on the merits and impact of this type of FDI on recipient firms. The present paper contributes by studying the impact of CB M&As on various aspects of target Indian companies. It concludes by raising concerns on the expectation of India Inc. from FDI by way of CB M&As. Keywords: Corporate Performance, Cross-border Mergers & Acquisitions, FDI
1. Introduction
The last two decades have witnessed a dramatic world-wide increase in the flow of Foreign Direct Investment (FDI), accompanied by a marked change in the attitude of most developing countries towards inward FDI. As against a highly suspicious attitude of these countries towards inward FDI in the past, most of these countries now regard FDI as beneficial for their development efforts and tend to compete with each other for getting higher proportion of it. India is no exception to it. Though both economic theory and empirical evidences suggest about the positive impacts of FDI on host countries, many recent studies have pointed out some potential risks in receiving FDI. Notwithstanding the fact that the empirical relevance of some of these sources of risks remains to be demonstrated, the potential risks do appear to make a case for taking a nuances view of the likely effects of FDI. After globalization of the economy, India emerged as a preferred destination for FDI. The concluding 11th five year plan and the fore coming 12th plan
January 1-4, 2012
Impact of Foreign Direct Investment in India by way of Cross-border Mergers & Acquisitions
Bhagwan Jagwani bhagwan.jagwani@ghsimr.org Dr. Gaur Hari Singhania Institute of Management & Research, Kanpur
Over the last two decades, the share of cross-border mergers and acquisitions (CB M&As) in the global FDI inflows has been over 50%. The Indian Corporate sector too experienced a boom in this form of FDI. The increasing flows of foreign capital, especially the impressive proportion of CB M&As, raises questions on the merits and impact of this type of FDI on recipient firms. The present paper contributes by studying the impact of CB M&As on various aspects of target Indian companies. It concludes by raising concerns on the expectation of India Inc. from FDI by way of CB M&As. Keywords: Corporate Performance, Cross-border Mergers & Acquisitions, FDI
1. Introduction
The last two decades have witnessed a dramatic world-wide increase in the flow of Foreign Direct Investment (FDI), accompanied by a marked change in the attitude of most developing countries towards inward FDI. As against a highly suspicious attitude of these countries towards inward FDI in the past, most of these countries now regard FDI as beneficial for their development efforts and tend to compete with each other for getting higher proportion of it. India is no exception to it. Though both economic theory and empirical evidences suggest about the positive impacts of FDI on host countries, many recent studies have pointed out some potential risks in receiving FDI. Notwithstanding the fact that the empirical relevance of some of these sources of risks remains to be demonstrated, the potential risks do appear to make a case for taking a nuances view of the likely effects of FDI. After globalization of the economy, India emerged as a preferred destination for FDI. The concluding 11th five year plan and the fore coming 12th plan
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