Impact of Foreign Direct Investment in India by Cross-border Mergers & Acquisitions

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 empirically examines the impact of CB M&As on the financial performance, management effectiveness, capital structure, cost of capital, and corporate governance practices of target Indian companies. It concludes by raising concerns on the expectation of India Inc. from CB M&As.