Recent Mergers and Acquisitions in Malta: An Analysis

--Peter J Baldacchino and Amy Vella

This paper evaluates the Merger and Acquisition (M&A) process undertaken by Maltese listed acquirers, with a further focus on the effectiveness of M&As in reaching their original objectives. The results obtained from interviews held with representatives of involved acquirers and stockbrokers showed that in a majority of acquisitions, the acquiring companies did not have a strategy to look for potential targets. The study identified a number of weaknesses in the M&A process undertaken by the acquiring companies. To this effect, it provides suggestions for changes to practice carried out by acquirers in M&A deals in order to achieve improved effectiveness. Some of the main recommendations include allocating more time to the acquisition, better understanding of the target and evaluating the feasibility of exerting managerial decisions post-acquisition. This paper, therefore, provides acquiring companies with valuable insight on how to increase their likelihood of success in M&As.

© 2014 IUP. All Rights Reserved.

Factors Influencing Pricing Multiples in India

--Bhargav Maniar

The study attempts to understand the various factors influencing popular pricing multiples in the Indian context. The accounting fundamentals, as observed by earlier researches, and return on investment are considered as factors influencing pricing multiples. The reference securities are adopted from the Nifty index. 1-year return found significance in three models—P/E, EV/EBITDA and Price to Sales. Next year growth in earnings, market beta, dividend payout ratio, return on equity and profitability margin are important for certain specific multiples. The models follow intuitive inferences (e.g., margin as a factor influencing sales multiple), show importance of absolute return on investments and analyst forecasts (growth next year) vis-à-vis earlier researches.

© 2014 IUP. All Rights Reserved.

Performance Evaluation of Agricultural Commodity Futures Market in India

--G R Sayee Prasanna

The agricultural commodity futures market in India is constantly evolving due to favorable government policies and continuous reforms since 2002. An important function of the futures market is to aid in efficient price discovery. However, heightened volatility, induced by speculation has arguably distorted prices. This study aims at examining the gaps in the functioning of agricultural commodity futures market by using Johansen’s Cointegration, Granger Causality and Johansen’s Vector Error Correction Model (VECM). The results indicate oscillating leadership in price discovery between futures and spot markets depending upon the nature of the commodity, time to maturity of the contracts and liquidity in the market. The findings of the paper underscore the need for active intervention by the regulators.

© 2014 IUP. All Rights Reserved.

An Analysis of the Impact of Global Recession on Indian Stock Market
with Particular Emphasis on a Few Leading Sectors

--Ranajit Chakrabarty and Asima Sarkar

This paper intends to study the impact of global meltdown of 2008 on the overall stock market volatility, and the change in the performance of 20 reputed companies, from four sectors, listed under the National Stock Exchange. An effort has been made to find out the status of recovery of these 20 companies after the global recession began in the last week of October 2008. The objective of this study is to find out the extent of loss suffered by these companies and the time taken by them for recovery. The analysis will be of use to investors as well as policy makers.

© 2014 IUP. All Rights Reserved.

Securitization of Microloans: An Indian Perspective of the Innovation in Microfinance Industry

--Prasad Pole, Anurag Asawa and Deepak Shah

Though securitization of microloans started in 2009, it has been growing in size and numbers. It is an innovative way of supporting microfinance which has come under pressure for want of capital. With priority sector lending norms remaining unchanged and direct lending to microfinance institutions seen as risky by banks, securitization is seen as a viable option to banks. This paper discusses the securitization deals in Indian market.

© 2014 IUP. All Rights Reserved.

Efficacy of Refined MACD Indicators: Evidence from Indian Stock Markets

--V Subramanian and K P Balakrishnan

Moving Average Convergence Divergence (MACD) indicator is the most widely used technical analysis tool to identify trading signals based on the trends in security prices. On testing some of the standard and refined MACD indicators on the movements of BSE Sensex and NSE Nifty during 1997-2010, it was found that the returns of refined MACD indicators outperformed the benchmark market returns. Thus, the findings of this paper challenge the Efficient Market Hypothesis, which rules out the possibility of earning excess returns.

© 2014 IUP. All Rights Reserved.