Corporate Takeovers in in Malaysia: The Determinants of Post-Acquistion Values of Acquiring Firms
19 Pages Posted: 11 Dec 2007
Date Written: November 2007
Abstract
This study investigates acquiring firms' values, measured by Tobin's q before and after a take-over event. The sample consists of 60 large take-overs by Malaysian public listed firms from 1990 to 1999. Using the agency theory framework, the impact of the identity of the dominant owner of the acquiring firms, transaction, and target firm's characteristics were also examined. The finding shows that acquirers had higher q value than the control firms before the take-over event but it (the q value) declined after the take-overs. It was found that ownership variable has greater explanation for post take-over firm value than the target firm characteristics and transaction characteristics. The evidence suggests that acquiring firms owned by family creates more value than others and thus reduces agency problem associated with takeovers.
Keywords: Corporate takeovers, Tobin's q, firm value, ownership structure, target firms' characteristics, Malaysia
JEL Classification: G30
Suggested Citation: Suggested Citation
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