(LUẬN văn THẠC sĩ) acquirer abnormal returns in ma within banks, evidence from selected asean countries

UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS ACQUIRER ABNORMAL RETURNS IN M & A WITHIN BANKS: EVIDENCE FROM SELECTED ASEAN COUNTRIES A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By NGUYEN THI NGOC DUNG Academic Supervisor: CAO HAO THI HO CHI MINH CITY, November, 2013 TIEU LUAN MOI download : skknchat@gmail.com Contents List of tables iii List of figures iii Abbreviation iv Abstract v Chapter : Introduction 1.1 Problem statement 1.2 Research objectives .2 1.3 Research questions 1.4 Research scope 1.5 Research contribution 1.6 Research structure Chapter : Literature review 2.1 Definition of M & A 2.2 Types of M & A 2.3 Motivation for M & A 2.4 Method for calculating event’s effect 2.4.1 Important time frames .6 2.4.2 Calculating Method 2.5 Testing significant of abnormal return 2.6 Factors affect M & A 11 2.7 Overview the using of event study in banking M&A 15 2.8 Overview about bank M & A in ASEAN countries 15 2.9 Conceptual framework 16 Chapter : Methodology 18 Page: i TIEU LUAN MOI download : skknchat@gmail.com 3.1 Research process 18 3.1.1 Estimation of abnormal returns 18 3.1.2 Analyzing factors effect CAR 21 3.2 Data collection .21 Chapter : Data analysis .26 4.1 Descriptive statistics 26 4.1.1 Abnormal return and cumulative abnormal return to acquirers 26 4.1.2 Cross-section regression analysis 34 4.2 Inferential statistics 38 Chapter : Conclusions and recommendations 40 5.1 Conclusion 40 5.2 Recommendations .41 5.3 Limitation and further research 42 Reference 43 Appendice .50 Page: ii TIEU LUAN MOI download : skknchat@gmail.com List of tables Table 3-1: Descriptive statistics of sample characteristic 22 Table 3-2: M&A by country .23 Table 3-3: M & A by year 24 Table 4-1: Average abnormal return, and number of positive and negative observations for 20 days before through 20 days after announcement date 28 Table 4-2: Average abnormal returns between groups and test of difference 30 Table 4-3: Cumulative average abnormal returns and their t statistics .33 Table 4-4: Cumulative average abnormal returns between groups and test of difference .33 Table 4-5: CAAR(-18, 10) categorized by characteristics 35 Table 4-6: Correlation testing 37 Table 4-7: Cross-section regression result 38 List of figures Figure 2-1: Process for calculating abnormal return 17 Figure 2-2: Acquirer's cumulative average abnormal return (CAR) from merger and potential effect factors 17 Figure 4-1: Average abnormal returns from -20 days to +20 days around announcement date 28 Figure 4-2: Cumulative abnormal returns from -20 days to +20 days around announcement date 32 Page: iii TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries Abbreviation AAR(s): Average Abnormal Return(s) APT: Arbitrage Pricing Theory AR: Abnormal return ASEAN: Association of Southest Asian Nations B&B: Bank and Bank B&O: Bank and Other institute CAAR(s): Cumulative Average Abnormal Return(s) CAPM: Capital Asset Pricing Theory CAR(s): Cumulative Abnormal Return(s) M & A: Mergers and Acquistions Page: iv TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries Abstract This paper examines acquirer’s abnormal return from merger and acquisition (M & A) between two banks, and between bank and non-bank institute By using event study and market model, M & A cases announcing from Jan 2005 to Dec 2012 of ASEAN are investigated Besides that, determinants affect abnormal return like acquirer size, listing target status, payment method, learning by doing, bidder leverage, type of M & A, Tobin q ratio, target nation, etc are analyzed in detail Key words: ASEAN mergers, acquisition, M & A, abnormal return, event study, market model Page: v TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries Chapter : Introduction 1.1 Problem statement The problem of merger and acquisition (M & A) has been mentioned much these days in Vietnam This can be checked through a famous searching tool – Google by typing key word “sáp nhập” – mean merger, and you will find at least 426,000 related results with that This trend can be understood that when the economic, or especially financial situation become hard, firms think more about M & A as a resolution for rescuing To measure the effectiveness of a M & A deal, we need even years to know, but it does not take long time to see the reaction of the market Besides that, according to Andrade, Mitchell and Stafford (2001), market response around acquisition announcement is the best way to examine the success of the deal Problem is how to measure the response of market in front of M & A news? One of the common methods is comparing the return from the company’s stock around the time of announcement of M & A which called abnormal return and average return of it in normal time (expected return) By using market model and event study, we can calculate abnormal return to specific object like acquirers (who offer merger), target firms, or even their industry rivals, etc Applying this method, many studies have done With specific country, there are some researches like Bae, Kang and Kim (2002) about Korean Chaebol, Filbien et al (2011) about Canada, Brown and Fung (2009) about Japan Keiretsu, etc With specific industry, many researches about merging between banks, such as: James and Weir (1987), Hannan & Wolken (1989), Houston and Ryngaert (1994), DeLong (2001), Cornett et al (2003), Anderson et al (2004), Beitel et al (2004), Lepetit et al (2004), Karceski et al (2005), DeLong and DeYoung (2007) etc, or about telecommunication firms (Akdogu, 2009) One notice point here is most of above studies based on data and situations of developed market like US, or European Limited studies about M & A in emerging market: William & Liao (2008) search Page: TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries -Appendice Appendix 1: Studies with event study Writer, Title year Stockholder Delong gains L (2001) from G Methodology Data Objective Result Event study + US cases Examine wealth Bank mergers that focus market model (1988 - effect of bank both mergers activity focusing 1995) Estimation versus diversifying bank mergers by distinguishing window: -300 Daily days to -51 stock days return geographic are and value- increasing between types of mergers (activity and geography) Merger focus on activity tends to increase wealth while Event focus geography window: on does not destroy wealth -10 days to +1 days Risk and return: the case of Mandelker Event study + US cases (1974) Capital asset (1948 - impact of firms pricing model 1967) mergers on return of about 14% on merging firms Examine the Monthly window: -60 stock months return to earn abnormal the average in the seven acquirer Estimation Stockholder of acquired months preceding the merger months Event window: -40 months to +40 months Return to Bidders and Targets in the Acquisition process: evidence from the Banking industy Hannan, T Event study + H., market model Wolken, D (1989) & US cases J Estimation window: -90 1982 to 1987) days to -15 days Event Examine the Gain to stockholder of effects on target firms stockholder wealth of of acquisition Daily announcement stock involving return publicly banking window: No gain to stockholder bidding firms acquisition announcement involving traded publicly traded banking organization Wealth Page: 50 TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries Writer, Title Methodology year Data various Objective Result transfer organization from lengths from - shareholder of bidding 15 firms to shareholder of days to +15 days target firms Positive combined wealth effects are registered by combinations involving less capitalized target firms and vice versa Hostile bank takeover offers: Analysis Baradwaj, Event study + B market model G., Fraser, and R., Furtado, E implications (1980 to D & Estimation 1987) window: -210 days to -61 P (1990) US cases days Estimate the Target shareholder in effect of hostile hostile deal experience bids on higher abnormal return shareholder of than one of non-hostile Daily target and stock bidding banks deal Bidder shareholder in return hostile Event deal although experience window: negative abnormal return, they various still less negative than lengths from one in non-hostile deal -60 days to +60 days Common stock Millon Event study + returns Cornett, M., market model in corporate takeover bids: & De, (1982 to S (1991) US cases Estimation 1986) window: +16 Evidence from days to +75 interstate bank days mergers Examine the Positive stock price reaction of stock reaction for both bidder market and target banks to the announcement of Daily interstate stock mergers bank return Event window: - 15 days to + 15 days Investor Hagendorff, Event study + US cases Examine the Acquirer experience Page: 51 TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries Writer, Title year protection and J., the M., value effects of bank merger Collins, Methodology Data Objective market model and effect of investor higher European protection law in targeting low protection the economies & Keasey, K Estimation cases window: -121 (2008) days to -21 announcements in Europe and the US Result target country (1996 to days 2004) Event Daily window: stock various return to returns European when (most economies) acquirer’s than returns protection regime (US) targeting high lengths from 20 days to + days Announcement Scholtens Event study + US cases Investigate effects of bank and market- + Europe announcement positive mergers (2004) adjusted cases effect of large return in Wit Europe and the return model (alpha US = 0, beta =1) the Mergers result in small abnormal bank mergers in (1990 to 2000) European and US stock market Target banks experience higher returns than bidders Event window: - days to + 31 Daily stock return days Gains to J Event study + Canada Merging Firms Y., & Kooli, market model cases and M Their Rivals: Evidence from Canada Filbien, May) (2011, Estimation window: -300 (1994 to 2009) Event Shareholder of Canadian M merging & A environment experience affects gains to creation merging firms Daily and their stock industry rivals days to -15 days Examine how the return firms wealth Stock price response of the rivals of Canadian acquiring firms is positive window: Stock price of acquiring -3 days to + firms’ rivals is more days, and favorable for rivals after a dormant period within - days to + Page: 52 TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries Title Writer, year Methodology Data days Objective Result a specific industry Stock price of target firms’ rivals is negative when the industry has a high degree concentration particularly of and in mining sector Page: 53 TIEU LUAN MOI download : skknchat@gmail.com the (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries Appendix 2: Common factors affect abnormal return No Variables Regulation changes Number of bidders Explanation Change of regulation/law (tax law 1968-1969/ 1986) Bidder attend merger may be one or more than one (multiple) Two common types Datta Kiymaz x x Moeller x x x x Hagendorff of transaction: merger and tender offers Merger: negotiate directly with the target’s management/board Type of transaction of directors and approved them before going to shareholder vote Tender offers: offer is made directly to target shareholder (this offer maybe friendly or unfriendly) Merger transaction may be made Mode of payment by cash, or stock/equity, or x x x x x x x x combination of both Two common types of merger: Type of merger conglomerate (unrelated) merger and non-conglomerate Country Merger between two domestic diversification firms, or different country firms Target’s market to Market to book value ratio of book value target firm Intensity of x x x bidding competition in terms of the attractiveness of an industry to Industry appeal all bidders It is by dividing the dollar value of acquisitions in x the target’s industry by the total dollar value of all mergers in the relevant year Unit acquisition 10 Exchange rate Whole firm or only unit of firm is acquired The relative strength or weakness of domestic versus x x Page: 54 TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries No Variables Explanation Datta Kiymaz Moeller Hagendorff foreign currency can influence the premiums paid in a merger Company have involvement in prior the country through: target affiliate (a chartered business owned by company 11 Prior involvement in the target country less than 50%); division (an internal unit of company); joint business in venture (a which x two companies share responsibility and ownership); and subsidiary (a chartered business owned by another company at least 50% or more) 12 Language Goodwill 13 accounting standards 14 Goodwill tax 15 Kind of target Both bidder and target are English speaking country The treatment accounting equity of x goodwill (write-off reserves against versus x x amortization against earnings) Tax deductible x Public, private, or subsidiary target x Small (large) acquirers have a market capitalization equal to or 16 Size of acquirer less (greater) than the market capitalization of the 25th x percentile of NYSE firms in the same year 17 Deal attitude Friendly or hostile merger x Transaction value divided by 18 Relative size equity market capitalization of x acquirer 19 Tobin’s q 20 Bidder leverage Firm market value/book value of assets Firm’s total debt over the firm’s market value x x Page: 55 TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries No Variables Explanation Datta Kiymaz Moeller Hagendorff Value of all corporate control transaction for $1 million or more reported by SDC for each 21 Liquidity index for year and two-digit SIC code the target divided by the total book value x of assets of all Compustat firms in the same two-digit SIC code and year Operating 22 Operating cash flow/asset cash flow is calculated by sales minus the cost of goods sold, sales and general administration, x and working capital change 23 Shareholder Level of investor protection in protection laws of target country 24 Target EPSt-1 25 Relative ROE 26 Deal value Pre-merger earning per share of target ROE of the target divided by the ROE of the acquirer Logarithm of the dollar value of the M & A transaction x x x x Pre-merger non-interest income 27 Non-interest incomet-1 which calculated by the share of non-interest income to the total of non-interest and x interest income 28 29 Acquirer total Pre-merger total cost of acquirer costt-1 per employee Acquirer ROEt-1 Pre-merger ROE of acquirer x x Page: 56 TIEU LUAN MOI download : skknchat@gmail.com (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries (LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries(LUAN.van.THAC.si).acquirer.abnormal.returns.in.ma.within.banks evidence.from.selected.asean.countries