The "inconclusive" existing literature on long-term horizon studies of mergers is the motivation of this paper to reexamine the post-merger performance and explore the reasons of unsatisfactory performance. We test efficiency theory of mergers by examining the industry adjusted operating performance of mergers. Unlike the existing literature which examines the operating performance of mergers at end level (ROA or ROE), we not only examine the operating performance at end level but also analyze the performance at each stage of operation i.e. material, labor, overheads, tax, interest and sales. We do not find synergy creation at the end level (i.e. ROA level). However, we observe synergy creation at tax and interest level and synergy destruction at labor and overheads level. The performance of different categories of mergers which are group/non-group mergers, related/unrelated mergers and BIFR/non-BIFR mergers is also examined. Factors explaining the post-merger profitability, efficiency and cash flows are also examined.

The main aim of this article is to examine the relation between institutional ownership and stock liquidity. Using a large sample of Indian firm data for the period 2001–2012, we estimate two liquidity measures, Amihud illiquidity and HL-spread. We find that institutional ownership is negatively related to the stock liquidity. We also find that the negative institutional ownership–stock liquidity relation is mostly driven by foreign institutional investors (FIIs) and Bank ownership. Conversely, retail ownership is positively related to the stock liquidity. Importantly, we find that institutional investors are more likely to hold liquid stocks. These findings are consistent with the hypothesis that the level of institutional ownership proxies for informed investors, while they trade liquid stock to reduce price impact cost.

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Purpose The purpose of this paper is to examine the impact of market timing and pseudo market timing on equity issuance decisions of IPOs in an emerging economy – India. Indian new issues market provides a perfect setting to test market timing against pseudo market timing due to two reasons. First, the US literature shows that most underpriced IPOs are highly overvalued and in India, the authors have the evidence of underpricing of IPOs. But whether Indian IPOs are overvalued or not it is yet to be tested. Second, majority of IPOs were issued in India only after the 1991 economic reforms which may signal the evidence for pseudo market timing hypothesis. Design/methodology/approach The authors use direct test to examine the impact of market timing and pseudo market timing variables on the IPO activity. The direct tests of market timing and pseudo market timing hypotheses are based on the positive relation of market timing variables and market conditions variables with IPO activity. The authors examine the long-run performance of IPOs by using the calendar-time regression approach to test market timing against pseudo market timing. This serves as indirect test of market timing and pseudo market timing. Evidence of market timing using indirect test shows that there is a decline in the long-run stock performance of IPOs. Findings The results show that in India, firms issue equity not just due to market conditions but they also issue equity in order to time the market. The results of market timing are also supported by the calendar-time approach results. However, the authors find that the evidence of market timing is stronger for hot issue markets as compared to cold issue markets. Originality/value This is the first study to comprehensively examine market timing and pseudo market timing using direct and indirect tests for an emerging market context.

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