Motives, governance, and long-term performance of mergers and acquisitions in Asia

Abstract

This study aims to examine the long-term performance of post-Mergers and Acquisitions (M&A) based on the motive's category. This study also examines whether the governance at firm-level and country-level affects the relationship between motives and long-term performance of M&A. This study uses a sample of 301 completed M&A transactions of Asian companies in 11 countries from 2002 to 2012 and analyses the data using the cross-sectional moderated regression method. This study measures and categorizes M&A motives into synergy and agency categories using two alternate ways, which first using the stock market reaction data of acquirer and target at the M&A announcement period estimated by applying an event study methodology, and the second using the combination of the stock market reaction data and some accounting variables through logistic regression analysis. This study finds that synergy-motivated M&A results in significantly higher long-term performance post-M&A than agency-motivated M&A. It also proves that the positive effect of M&A motives on the long-term performance post-ABOUT THE AUTHORS Elvia Shauki is a lecturer of financial accounting, in the Accounting Department, Faculty of Economics and Business, Universitas Indonesia. She obtained her Doctoral degree from La Trobe University Australia and master's degree from Catholic University of Louvain in Belgium. Research interests: financial accounting, sustainability reporting, accounting education, and integrated reporting.

The Dominant Motives of Mergers and Acquisitions in the Energy Sector in Western Europe from the Perspective of Green Economy

“…Among other motives, the latter, although they are not of great importance for the shareholders themselves, often do not provide greater chances for the company's success in the future, but they are a particularly important element of the global puzzle that determines the choice of this form of company development. Importantly, in the case of this type of process, there may also be problems described in the framework of the agency theory, consisting of a significant difference between the motives of the owners of the entity and the motives of the managers they employ [55].…”

The Performance Analysis of Companies Before and After Merger and Acquisition

“…Singh (2013) The financial performance before and after mergers and acquisitions was examined and compared in this study. The performance of businesses is not being significantly changed by mergers and acquisitions (as likewise suggested by: Jallow et al, 2017;Liu et al, 2021;Rani et al, 2020;Andriuškevičius & Štreimikienė, 2021). Although not particularly significant, the overall impact of these mergers and acquisitions on the entities has been favorable for at least one of the objectives of all the entities.…”

The effect of the acquirers’ market capitalization and payment method on the short-term return of M&As in Greater China and South Korea

“…A factor that may cause the abnormal return to be lower for firms with a high market capitalization as compared to firms with a low market capitalization is that the agency problem tends to become greater when the firm has a higher market capitalization (Demsetz, Lehn 1985). The agency problem in M&As refers to the selfinterested behavior of top management (Rani et al 2020). In many cases, it is in the self-interest of top managers to grow companies through mergers or acquisitions as it exposes them to increased bonuses and enhances their self-esteem.…”