Nurhazrina Mat Rahim and Wee Ching Pok
The purpose of this paper is to analyse the short-term wealth effects of mergers and acquisitions (M & As) in Malaysia. In addition, this study also examines the factors…
Abstract
Purpose
The purpose of this paper is to analyse the short-term wealth effects of mergers and acquisitions (M & As) in Malaysia. In addition, this study also examines the factors that affect the short-term shareholders’ wealth during M & A announcements in Malaysia.
Design/methodology/approach
The short-term wealth effect is measured by the Cumulative Average Abnormal Returns (CAARs). For the purpose of this study, the wealth effects of a sample of 180 target and 196 bidding companies announced in Malaysia during the period from 2001 to 2009 are analyzed.
Findings
Results of the study revealed that there are positive market reactions by both target and bidding shareholders towards M & A announcements. However, target shareholders earned significantly higher CAARs than bidding shareholders. There is sufficient evidence to suggest that economic condition surrounding merger announcements, type of acquisition (diversified/related), premium paid and status of bid (successful/failed) affect the short-term wealth effects of target and bidding shareholders during M & A announcements. However, the impact on the target and bidding shareholders are different. Relative size negatively affects bidding shareholders’ wealth. Target with higher ROE also earned significantly higher returns.
Originality/value
There is high number of announced M & A deals in Malaysia, little is known about the determinants of short-term wealth effects of M & As in emerging market Malaysia, in particular the third M & A wave.
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This chapter investigates the impact change of the composition of market agents on the timing of the arrival of information in Bursa Malaysia. The price discovery role of futures…
Abstract
This chapter investigates the impact change of the composition of market agents on the timing of the arrival of information in Bursa Malaysia. The price discovery role of futures trading on the spot market is examined through three distinct sub-periods: pre-crisis, crisis and after capital controls. For this purpose, the Johansen Cointegration (1988, 1991) and VECM and Granger causality are used. The analysis shows that there is no significant long-run relationship. As for short-run, the results show futures lead spot. However, futures’ lead is shorter in pre-crisis and crisis periods where foreign institutional investors dominate. This study deduces that the significant change in the composition of market agents could contribute to the variation of lead–lag relationship.
Norhidayah Abdullah and Wee Ching Pok
– The purpose of this paper is to examine the relationship of separation of cash flow rights (CFR) and control rights (CR) and debt policy of Malaysian listed family firms.
Abstract
Purpose
The purpose of this paper is to examine the relationship of separation of cash flow rights (CFR) and control rights (CR) and debt policy of Malaysian listed family firms.
Design/methodology/approach
The sample of this study consists of 256 observations from companies listed in the Main Board of Bursa Malaysia for the period between year 2005 and 2009. The multivariate ordinary least square regressions have been conducted in order to examine the relationships between separation of CFR and CR and debt.
Findings
The study reveals that the separation of CFR and CR does not lead to the increase of debt policy among Malaysian listed family-owned firms. Thus, the results suggest there is no expropriation of minority interests in Malaysian family-owned firms. The plausible reason is that Malaysia has better investor or shareholder protection laws compared to other emerging markets such as Indonesia, Thailand and Philippines.
Research limitations/implications
The first limitation is the underestimation of CFR and CR because the affiliated business of unlisted firms and foreign companies are excluded. The second limitation is the presence of 100 percent ownership in firms controlled by family-owned firms or in firms that are controlled by another firms which are under the controlled of family-owned firms, or both, will lead to equal proportion of CFR and CR. Thus, the degree of separation of CFR and CR of such firms are indeterminable.
Originality/value
This paper investigates the expropriation of minority interests by Malaysian family-owned firms on which has not been explored.
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Suk-Joong Kim and Michael D. McKenzie
Perhaps the most significant development in the global business arena in the post-war period has been the emergence of the Asia-Pacific rim countries as a significant economic…
Abstract
Perhaps the most significant development in the global business arena in the post-war period has been the emergence of the Asia-Pacific rim countries as a significant economic force.