Does board independence, ownership structure, and group affiliation impact the acquiring companies' announcement returns in India

The study evaluates the impact of board independence, ownership concentration, and business group affiliation on the acquiring companies' announcement returns in India. The analysis is conducted through standard event study methodology and cross-sectional regression analysis. The results indicate that the independent board of directors fails to obviate the conflict of interest between the controlling and the minority shareholders in mergers and acquisitions pursued by business-group-affiliated, Indian acquiring companies, with promoters as the dominant shareholders. Thus, the results corroborate the entrenchment theory and negate the applicability of monitoring theory in the Indian M&A context. The study adds to the existing literature on M&As, corporate governance, and business groups by analysing how the critical interactions between board independence, ownership concentration, and business group affiliation impact the value creation in M&As in India. The study offers implications for the regulator, the Securities and Exchange Board of India (SEBI).