Online from: 1975
Subject Area: Accounting and Finance
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|Title:||Long-term share performance of Malaysian acquiring firms|
|Author(s):||Lee Siew Peng, (Faculty of Accountancy and Management, University of Tunku Abdul Rahman, Kajang, Malaysia), Mansor Isa, (Capital Market Authority, Riyadh, Saudi Arabia)|
|Citation:||Lee Siew Peng, Mansor Isa, (2012) "Long-term share performance of Malaysian acquiring firms", Managerial Finance, Vol. 38 Iss: 10, pp.958 - 976|
|Keywords:||Acquisition value relative size, Long-term acquirer performance, Malaysia, Malaysian acquisition, Method of payment, Post-acquisition acquirer returns, Returns, Stock markets, Target status|
|Article type:||Research paper|
|DOI:||10.1108/03074351211255164 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Acknowledgements:||JEL classification – G34|
Purpose – The purpose of this paper is to examine the long-term post-acquisition share performance of Malaysian acquiring firms over the period 2000-2004.
Design/methodology/approach – The authors use the event-type methodology to analyse acquirer returns in relation to target status, method of payment and other firm characteristics, using both univariate and multivariate analyses. In total three performance measures are used to identify the long-term share performance of acquiring firms: cumulative market-adjusted abnormal returns, the buy-and-hold market-adjusted and buy-and-hold matched-sample abnormal returns.
Findings – The results show the existence of negative abnormal returns to acquirers over two- and three-year periods after acquisition. The study also finds that acquirers of private targets earn negative returns, while acquirers of public targets earn insignificant returns. It is also found that under-performance is limited to the small size acquirers and to large relative-size acquisitions. Furthermore, the results indicate that acquirer's long-term performance is not related to the method of payment and book-to-market ratio of the acquirer.
Originality/value – The Malaysian stock market is relatively small compared to the US and UK markets where most previous research has been carried out. The current study allows us to assess the robustness of the models and whether the findings in developed markets may be generalized to the smaller developing markets. This paper contributes to the present body of knowledge by offering evidence of acquirer's post-acquisition performance from a developing market.
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