Effects of Take-over Motives and Ownership Structure on Premiums Paid: Evidence from Malaysia

  •  Saw-Imm SONG    
  •  Ruhani ALI    
  •  Subramaniam PILLAY    


This study seeks to determine the effect of motives for take-overs and ownership structure on the level of premiums paid in take-over transactions in Malaysia. Using 136 take-over transactions for the period of 1990 -1999, we found that the take-over premiums were much higher than those in developed countries. The various motives for take-overs had different impact on the level of premiums paid in different industries. The evidence also suggests that the main motive of the bidders was more towards enhancing the earnings base of the bidders rather than playing the disciplinary role for under-performed target. Family-owned firms paid a lower level of premiums compared to non-family firms unless the targets had good performance (relatively higher ROAs). This study concludes that ownership by family aligned the interests of the owners to that of the shareholders rather than resulting in the expropriation of minority shareholders.

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