The tendency of go-public enterprises undertaking mergers and acquisitions in Indonesia

Abstract

The objectives of this research are (1) to find out whether the seven factors (to increase economic scale, to secure raw materials, to expand the market, to economize taxes, to utilize the debt capacity, to increase profits, and to reduce competition) impose upon the decision on companies which have gone public to carry out mergers and acquisitions (M&A) (2) to find out which of the seven factors plays the dominant role in affecting M&A. The empirical research was conducted by using hypotheses as catalysts to test the seven factors above. The tool used in this research is multiple regression. The result of the research indicates that reducing competition affects companies which have gone public in Indonesia to carry out acquisitions. Other factors which effect the carrying out of acquisitions are the increasing of economic scale, the expanding of the market, the securing of the raw materials, and the saving of the taxes. The last two factors which are the making use account payable capacity, and the increasing profit are less affecting in carry out acquisitions. All companies (41) carry out acquisitions without mergers. Based on this research it is recomended that (1) the goverment should make laws which regulate acquisitions (2) Ikatan Akuntan Indonesia (IAI or Indonesian Institute of Accountants) establish accounting standards of acquisitions. Laws and accounting standards on acquisitions are very important because (1) the acquisitions made are by companies which have gone public (2) transactions conducted involves a great amount of capital (3) the acquisitions made are those of the same group (4) M & A tend to monopoly and commit crimes (5) M & A may cause disadvantages to the minority shareholders (public) (6) M & A may lead to inside trading, and (7) there has not been any laws on M&A. The research of M & A may be expanded. For example, the research on the existing M & A accounting, which may provide comprehensive information on M & A in Indonesia.