Shareholder's wealth creation in mergers and acquisitions in indian it industry: an event study methodology of target company's perspective Aamukta*, Dr. Ghatak Anirban** *Research Scholar, Christ University, Bangalore, India **Associate Professor, Institute of Management, Christ University, Bangalore, India Online published on 17 December, 2016. Abstract The aim of this paper is to analyze if target firm shareholders ascertain positive or negative abnormal returns around Information Technology merger announcement. The study has employed event study methodology to estimate abnormal returns. The study includes sample size of 8 mergers in IT from 2006- 2015. As daily stock data is used to ascertain abnormal returns, there is an issue of non-synchronous trading. The models like Scholes and William, Dimson aggregated coefficient and Fowler and Rorke are employed to ascertain unbiased beta and alpha value (model parameters). The other model used are mean adjusted model and market adjusted model. Market model is the core model to ascertain the effect of Information Technology merger announcement on the shareholder's abnormal return. The research has employed a short event window of 61 days and focusses on the narrow 3- day window to capture significant effect of IT merger announcement on shareholders’ wealth. The findings suggest that target firm shareholders have gained a positive abnormal returns from the Information Technology merger announcement. Top Keywords Mergers and acquisitions, event study methodology, target firm, shareholders wealth creation, Information Technology. Top |