Author(s): Nikunj Chaudhary, Rajendra Sahu and Vaibhav Agarwal
Considering that mergers and acquisitions (M&As) are pivotal strategic decisions, it is imperative to delve into the resultant synergy creation. Therefore, the paper meticulously examined the impact of mergers on the operational performance of Bank of Baroda (BOB), one of India’s leading state-owned banks, in the short and long duration. This study employed a multifaceted approach, incorporating event study methodology (ESM), strategic similarity analysis (SSA), and ratio analysis, to comprehensively investigate both the short and long-duration performance of BOB. The outcomes unveiled that BOB’s shareholders reacted optimistically to the merger news. BOB’s financial performance after merger demonstrated noteworthy improvements, evident in its enhanced ratios and SSA. Specifically, the study revealed significant enhancements in various key variables, including profitability, efficiency, liquidity, relative size, and cost-to-income ratio, underscoring the positive impact of the merger on Bank of Baroda’s overall operational performance. The study shows that management should not presume that M&As will invariably yield higher profits and synergies. In order to approach a more realistic understanding, a parallel case study-based research could be initiated in conjunction with the present study.