Merger and acquisition announcements and their effect on returns to shareholders of bidding firms and target firms: Empirical evidence from Malaysia

Merger and acquisition announcements and their effect on returns to shareholders of bidding firms and target firms: Empirical evidence from Malaysia

This study investigates the impact of announcements of mergers and acquisitions (M&As) on stock prices of bidding firms and target firms in Malaysia. Using an event-study methodology to examine the market reaction to the announcements, 59 target firs and 26 bidding firms during the period from...

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Main Author: Al-Sabri, Haithm Mohammed Hamood
Format: Thesis
Language:eng
eng
Published: 2015
Subjects:
HG Finance
Online Access:https://etd.uum.edu.my/5558/1/s814401_01.pdf
https://etd.uum.edu.my/5558/2/s814401_02.pdf
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id my-uum-etd.5558
record_format uketd_dc
institution Universiti Utara Malaysia
collection UUM ETD
language eng
eng
advisor Nordin, Norhafiza
topic HG Finance
spellingShingle HG Finance
Al-Sabri, Haithm Mohammed Hamood
Merger and acquisition announcements and their effect on returns to shareholders of bidding firms and target firms: Empirical evidence from Malaysia
description This study investigates the impact of announcements of mergers and acquisitions (M&As) on stock prices of bidding firms and target firms in Malaysia. Using an event-study methodology to examine the market reaction to the announcements, 59 target firs and 26 bidding firms during the period from 1 January 2011 to 30 June 2015 have been identified. In addition, the acquirer’s status is taken into account in this study to examine their impact on abnormal returns (ARs). The data on M&As’ is obtained from Thomson SDC Platinum Merger and Acquisition Database and also from Bursa Malaysia website. The ARs are derived by using two models, namely the market model (MM) and market adjustment returns (MARs) model. FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBMKLCI) and FTSE Bursa Malaysia EMAS Index (FBMEMAS) are used as the benchmarks. The findings indicate target firms gain significantly on the announcement day (+3.5%). The multi-day windows around the announcement day also show positive cumulative average abnormal returns (CAARs) for the two models and the two benchmarks. +15.83% is reported in the longer window (-20 to +20) and +8.92% in the 3- day window. For bidding firms, no evidence of value creation is observed
format Thesis
qualification_name masters
qualification_level Master's degree
author Al-Sabri, Haithm Mohammed Hamood
author_facet Al-Sabri, Haithm Mohammed Hamood
author_sort Al-Sabri, Haithm Mohammed Hamood
title Merger and acquisition announcements and their effect on returns to shareholders of bidding firms and target firms: Empirical evidence from Malaysia
title_short Merger and acquisition announcements and their effect on returns to shareholders of bidding firms and target firms: Empirical evidence from Malaysia
title_full Merger and acquisition announcements and their effect on returns to shareholders of bidding firms and target firms: Empirical evidence from Malaysia
title_fullStr Merger and acquisition announcements and their effect on returns to shareholders of bidding firms and target firms: Empirical evidence from Malaysia
title_full_unstemmed Merger and acquisition announcements and their effect on returns to shareholders of bidding firms and target firms: Empirical evidence from Malaysia
title_sort merger and acquisition announcements and their effect on returns to shareholders of bidding firms and target firms: empirical evidence from malaysia
granting_institution Universiti Utara Malaysia
granting_department School of Economics, Finance & Banking
publishDate 2015
url https://etd.uum.edu.my/5558/1/s814401_01.pdf
https://etd.uum.edu.my/5558/2/s814401_02.pdf
_version_ 1747827949238747136
spelling my-uum-etd.55582021-03-18T03:37:51Z Merger and acquisition announcements and their effect on returns to shareholders of bidding firms and target firms: Empirical evidence from Malaysia 2015 Al-Sabri, Haithm Mohammed Hamood Nordin, Norhafiza School of Economics, Finance & Banking Othman Yeop Abdullah Graduate School of Business HG Finance This study investigates the impact of announcements of mergers and acquisitions (M&As) on stock prices of bidding firms and target firms in Malaysia. Using an event-study methodology to examine the market reaction to the announcements, 59 target firs and 26 bidding firms during the period from 1 January 2011 to 30 June 2015 have been identified. In addition, the acquirer’s status is taken into account in this study to examine their impact on abnormal returns (ARs). The data on M&As’ is obtained from Thomson SDC Platinum Merger and Acquisition Database and also from Bursa Malaysia website. The ARs are derived by using two models, namely the market model (MM) and market adjustment returns (MARs) model. FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBMKLCI) and FTSE Bursa Malaysia EMAS Index (FBMEMAS) are used as the benchmarks. The findings indicate target firms gain significantly on the announcement day (+3.5%). The multi-day windows around the announcement day also show positive cumulative average abnormal returns (CAARs) for the two models and the two benchmarks. +15.83% is reported in the longer window (-20 to +20) and +8.92% in the 3- day window. For bidding firms, no evidence of value creation is observed 2015 Thesis https://etd.uum.edu.my/5558/ https://etd.uum.edu.my/5558/1/s814401_01.pdf text eng public https://etd.uum.edu.my/5558/2/s814401_02.pdf text eng public masters masters Universiti Utara Malaysia Agarwal, M., & Singh, H. (2006). Merger announcements and insider trading activity in India: An empirical investigation. 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