Corporate Take - Overs in Malaysia: Market - Based Assessments

17 Pages Posted: 20 Sep 2009

See all articles by Ei Yet Chu

Ei Yet Chu

Universiti Sains Malaysia

Saw-Imm Song

Universiti Teknologi MARA (UiTM)

Date Written: September 4, 2009

Abstract

This study seeks to assess the take-over performance of the Malaysian public listed companies, using the market-based event study method. It also aims to examine managerial motives for take-overs, take-over transaction characteristics and ownership characteristics to infer any possible sources of value creation or possible agency conflicts that could have a profound impact upon announcements of the combined firms.

It was found the cumulative average abnormal returns (CAR) were significantly positive around the announcement dates of a take-over. The results show that agency related issues, namely ownership concentration and related party transaction, had greater explanatory power for take-over performance than the managerial motives for efficiency and transaction characteristics. The negative impact of concentrated ownership and related party transaction implies that the market perceived that large shareholders of the acquiring firm might entrench themselves by acquiring their own companies.

Keywords: Take-overs, event study, performance, motives, ownership, Malaysia

JEL Classification: G1, G3

Suggested Citation

Chu, Ei Yet and Song, Saw-Imm, Corporate Take - Overs in Malaysia: Market - Based Assessments (September 4, 2009). 22nd Australasian Finance and Banking Conference 2009, Available at SSRN: https://ssrn.com/abstract=1468345 or http://dx.doi.org/10.2139/ssrn.1468345

Ei Yet Chu

Universiti Sains Malaysia ( email )

Graduate School of Business
Universiti Sains Malaysia
Minden, 94300
Malaysia
60165793705 (Phone)
6046532792 (Fax)

HOME PAGE: http://www.gsb.usm.my

Saw-Imm Song (Contact Author)

Universiti Teknologi MARA (UiTM) ( email )

Kuala Lumpur
Malaysia
6082677636 (Phone)
6082677200 (Fax)

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