Title: Value creation in going private transactions

Authors: Pei-Ling Lee; Roy Wye Leong Khong; Suganthi Ramasamy

Addresses: Faculty of Business and Law, Multimedia University, Jalan Ayer Keroh lama, 75450 Bukit Beruang, Melaka, Malaysia ' Nottingham University Business School, University of Nottingham, Malaysia Campus, Jalan Broga, 43500 Semenyih, Selangor Darul Ehsan, Malaysia ' Faculty of Business and Law, Multimedia University, Jalan Ayer Keroh lama, 75450 Bukit Beruang, Melaka, Malaysia

Abstract: The study empirically analyses the stock price reaction and the determinants of shareholder gains in going private transactions in the Malaysian stock market. A cumulative average excess return of 21.99% is documented for 61-day event period using market adjusted return model. The excess returns earned by target shareholders are attributed to free cash flow, firm size, dividend payout ratio, debt, method of payment and return on equity. The model explains 66.96% of cross-sectional variation in stock returns.

Keywords: going private; excess returns; abnormal returns; event study; value creation; stock price reaction; shareholder gains; Malaysia; stock markets; controlling shareholders; dominant shareholders.

DOI: 10.1504/AAJFA.2013.054431

Afro-Asian Journal of Finance and Accounting, 2013 Vol.3 No.3, pp.274 - 295

Published online: 28 Jun 2014 *

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