Abstract
This study seeks to determine the effect of motives for take-overs and ownership structure on the level of premiums paid in take-over transactions in Malaysia. Using 136 take-over transactions for the period of 1990 -1999, we found that the take-over premiums were much higher than those in developed countries. The various motives for take-overs had different impact on the level of premiums paid in different industries. The evidence also suggests that the main motive of the bidders was more towards enhancing the earnings base of the bidders rather than playing the disciplinary role for under-performed target. Family-owned firms paid a lower level of premiums compared to non-family firms unless the targets had good performance (relatively higher ROAs). This study concludes that ownership by family aligned the interests of the owners to that of the shareholders rather than resulting in the expropriation of minority shareholders.
Highlights
Premiums paid in take-over transactions are positively related to potential acquisition-related benefits, either from expected synergistic gains or private benefits of control
This study seeks to examine the effect of ownership structure and the motives for take-overs on the level of premiums paid in take-over transactions in Malaysia
When an alternative measurement for premiums paid, was used, the explanatory power of the adjusted R square is slightly lower at 40.5 percent
Summary
Premiums paid in take-over transactions are positively related to potential acquisition-related benefits, either from expected synergistic gains or private benefits of control. Many studies highlight that the entrenched manager (Note 1) or the controlling shareholders in firms with high concentration of ownership engage in non-value-maximizing activities for private gains in East Asian countries (Claessens et al, 1999; Lemmon and Lin 2003). Malaysia provides a good case of study as it was among the most active corporate control markets in the ASEAN region in the 1990s (Metwalli and Tang, 2002). It accounted for 41 percent of the total deals and 38 percent of the M&A transaction value of target firms in ASEAN from 1990 to 2000. M&A transactions between local firms accounted for 74 percent of all the M&A transactions
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
