Ownership Structure, Motives and Corporate Takeover Performance of Malaysian Public Listed Firms

Abstract

Abstract: This study examines the impact of ownership structure and motives for takeover on firm performance, with reference to 52 large and fully integrated acquisitions (100 per cent purchase stake) by Malaysian public listed firms from 1990 to 1999. The results shows that the bidders underperformed before the takeovers compared to the benchmark firms using a matched sample by their asset size and principal activities before the takeover. Bidders post-takeover operating cash flow returns have significantly improved compared to their matched counterparts. We find that concentrated ownership has a significant positive impact on the post-takeover performance and vice versa for diffused ownership. This study also shows that if the substantial shareholders or the directors of the bidders personally own the targets, the impact on the post-takeover performance is significantly negative. The motives for managerial, financial or operational synergies however, do not explain the variations in post-takeover performance.