Title: Wealth effects and financial performance of cross-border mergers and acquisitions in five East Asian countries

Authors: Saw-Imm Song, Dorothy Chiok Choo Kueh, Rashidah Abdul Rahman, Ei-Yet Chu

Addresses: Faculty of Business Management, Department of Finance, Universiti Teknologi MARA, Kampus Samarahan, Jalan Meranek, Kota Samarahan 94300, Sarawak, Malaysia. ' Faculty of Business Management, Department of Finance, Universiti Teknologi MARA, Kampus Samarahan, Jalan Meranek, Kota Samarahan 94300, Sarawak, Malaysia. ' Accounting Research Institute, Universiti Teknologi MARA, Shah Alam 40450, Malaysia. ' Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Sarawak, Malaysia

Abstract: This study analyses the performance of cross-border mergers and acquisitions (CBMAs) in five East Asian countries using the event study method and key financial ratios. Although the results for average abnormal returns in Indonesia and Korea were inconclusive, the results for Malaysia, Thailand and the Philippines suggest that the market had reacted positively by adding value to the target firms upon merger announcements. There was a significant improvement in targets| free cash flow after CBMAs when compared to both before CBMAs and also control firms after CBMAs. The results also reveal that that these five East Asian countries have moved towards more efficient markets.

Keywords: CBMAs; cross-border mergers; cross-border acquisitions; East Asian countries; financial performance; wealth effects; Indonesia; Korea; Malaysia; Thailand; The Philippines; merger announcements; M&A.

DOI: 10.1504/AJFA.2011.039883

American Journal of Finance and Accounting, 2011 Vol.2 No.3, pp.219 - 240

Available online: 22 Apr 2011 *

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