Corporate Takeovers in in Malaysia: The Determinants of Post-Acquistion Values of Acquiring Firms

19 Pages Posted: 11 Dec 2007

See all articles by Saw-Imm Song

Saw-Imm Song

Universiti Teknologi MARA (UiTM)

Ruhani Ali

Universiti Sains Malaysia (USM)

Subramaniam Pillay

University of Nottingham - Malaysia Campus

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

Song, Saw-Imm and Ali, Ruhani and Pillay, Subramaniam, Corporate Takeovers in in Malaysia: The Determinants of Post-Acquistion Values of Acquiring Firms (November 2007). Available at SSRN: https://ssrn.com/abstract=1031609 or http://dx.doi.org/10.2139/ssrn.1031609

Saw-Imm Song (Contact Author)

Universiti Teknologi MARA (UiTM) ( email )

Kuala Lumpur
Malaysia
6082677636 (Phone)
6082677200 (Fax)

Ruhani Ali

Universiti Sains Malaysia (USM) ( email )

Jalan Sungai Dua
Minden, Penang 11800
Malaysia

Subramaniam Pillay

University of Nottingham - Malaysia Campus ( email )

Malaysia

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