A comparative study: cross border and domestic mergers and acquisitions on acquirers’ shareholder wealth effects in Malaysia

Leong, Yen Lee (2009) A comparative study: cross border and domestic mergers and acquisitions on acquirers’ shareholder wealth effects in Malaysia. Masters thesis, University of Malaya.

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In parallel with the global trends, cross border M&As have increased dramatically in Asia Pacific economies since the mid 1990s. Take-over activities were actively transacted by corporations to expand their business in order to tap the opportunities posted in the fast growing market. The increasing investment and trade liberalisation and deregulation in Asia encouraged cross border activities. Malaysia accounted for 41 percent of the total deals and 38 percent of the M&A transaction value of target firms in ASEAN from 1990 to 2000. The cross border M&A activities would speed up corporate restructuring, gaining market shares, business portfolio diversification and economic recovery during economic downturn. In the recent empirical show that cross border M&As perform even worst than those within borders. On average, acquiring firm shareholders experience significant wealth losses in domestic acquisitions, but not in international acquisitions. The research objective of the study is to identify: 1) The cross border or domestic M&A attained a better return to the acquirer’s shareholder wealth. 2) The determinants or factors that increase the return in acquirer’s shareholder wealth in M&A activities. In this study, the Market Model method is used to estimate the Beta of the acquirers’ shareholder. The CAR method is used to measure the post merger shareholders’ return. This research examines the magnitude and determinants of acquiring shareholder returns using 252 samples of domestic and foreign acquisitions of Malaysia firms during the period 2004-2008 by running OLS on the CAR with the determinants In this paper, estimation on the long term wealth effects for a paired sample of acquiring and target firms base on the event window of 60, 120 and 180 days after the announcement date. The regression result shows that the cross border M&A in Malaysia attained higher return to the acquirers’ wealth. The determinants of the direction of merger, method of payment and firm size show an impact to the acquirers’ shareholders’ return. However, the market climate is insignificant to the CAR which means there is no impact of the market climate towards the return.

Item Type: Thesis (Masters)
Uncontrolled Keywords: Domestic mergers, Shareholder wealth, Asia Pacific economy, Cross border activities, M&A, Malaysia
Subjects: H Social Sciences > H Social Sciences (General)
Date Deposited: 23 Jul 2013 01:01
Last Modified: 23 Jul 2013 01:01
URI: http://repository.um.edu.my/id/eprint/861

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