Predicting Malaysian corporate spin-offs using wealth transfer and debt risk reallocation
Despite the popularity and increase in complexity of spin-offs in Malaysia and the recent development in the investor protection regulations, regulators, corporations, and stakeholders alike still relied on generalized spin-off wealth effect measurements that are oblivious to m...
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| 主要作者: | |
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| 格式: | Thesis |
| 语言: | English |
| 出版: |
2020
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| 主题: | |
| 在线阅读: | http://psasir.upm.edu.my/id/eprint/89906/1/SPE%202020%2030%20-%20ir.pdf |
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| 总结: | Despite the popularity and increase in complexity of spin-offs in Malaysia and the recent
development in the investor protection regulations, regulators, corporations, and
stakeholders alike still relied on generalized spin-off wealth effect measurements that are
oblivious to market climate factors, and they are an imperfect gauge for predicting spin- off
potentials. This study measures the shareholders' wealth effect of spin-offs
announcements in Malaysia under different corporate environments and tests the wealth transfer
hypothesis to explain the measurements. Market Model analysis results show that spin-offs in
Malaysia generally result in statistically significant positive cumulative average abnormal returns
and further analysis via sub-sampling saw normal spin-offs achieve more while crisis spin-offs
achieved adversely. Spin-off potential to gain and to lose were significantly higher than
generalized average value. Multivariate analysis using financial distress inducing variables:
collateral, leverage, maturity, and security show evidence of wealth transfer through the
loss of collateral, short-term debts and interest-bearing-secured debts impact are
more prevailing. The wealth transfer hypothesis is even valid for debt without
covenants during adverse financial market conditions where creditors’ have heightened risk
sensitivity. Market players can expect higher returns during non-crisis spin-offs, project higher
spin-off potential to gain, vice- versa, and predict shareholders’ gain via creditor’s risk
reallocation. Regulators on the other hand, must attend to the regulatory weakness in preventing
non-covenant backed
creditors’ wealth appropriation. |
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