The Efficiency of Mergers and Acquisitions in Malaysia Based Telecommunication Companies

Abstract

This paper analyses the technical efficiencies (TE) of total asset model, current asset model and expense model of the mergers and acquisition (M&A) activities in Malaysia based telecommunication companies. For the purpose of this research, a two-stage analysis has been used. For the first stage, a CCR model is used to calculate the technical efficiency of individual companies during the period 2005-2010 and the multiple regression analysis is adopted in the second stage to examine factors such as intensity of acquisitions, sequence of acquisitions and size which influence the efficiency of the companies. As a result of the regression analysis, there is an existence of significant relationship which is of negative value between sequence of acquisitions and TE in both total asset model and current asset model. Further findings also showed that there is a significant relationship between size and TE in the current asset model and in the total asset model but the former holds a positive relationship while the latter has a negative relationship. Based on the regression analysis, none of the said factors above could explain the variation in TE in the expense model. At the end of this research, it is recommended that a further study should be done on this area by including additional variables namely the existence of the government linked corporations (GLCs) among the telecommunication companies and role of regulatory as they might also affect companies which are involved in M&A.