Return to shareholders of Malaysian successful takeover firms

Abstract

This paper examines the impact of takeover announcement on shareholders of successful Malaysian bidder and target firms for period 1980-1993. The standard event study methodology with Scholes-William adjustment for thin trading is used The results showed that the Malaysian market is fairly efficient and that bidder firms earn insignificant negative abnormal return while the target firms earn significant positive abnormal return from the announcement. The possible evidence of redistribution of wealth suggest a pattern that is consistent with hubris hypotheses, thus implies that bidding firm managers engage in takeovers even though there is no synergy.