Wealth Effect and Macroeconomics Factors of a Firm’s International Merger and Acquisition Exercise: Empirical Evidence from Multinational Firms

Authors

  • Bany Ariffin Amin Noordin Faculty of Economics and Management, Universiti Putra Malaysia, 43400 Serdang, Selangor Darul Ehsan, Malaysia.
  • Fakarudin Kamarudin Faculty of Economics and Management Universiti Putra Malaysia 43400 Serdang Selangor Darul Ehsan. Malaysia
  • Nazratul Aina Mohamad Anwar Putra Business School, Universiti Putra Malaysia, 43400 Serdang, Selangor Darul Ehsan Malaysia

DOI:

https://doi.org/10.5755/j01.ee.26.5.11418

Keywords:

macroeconomic factors, firm’s wealth, international merger and acquisitions, Malaysian multinational companies

Abstract

The aim of this study is to examine the influence of macroeconomic factors on the wealth effects of international merger and acquisitions by Malaysian multinational companies (MNCs). There are three macroeconomics factors: foreign economic condition, gross national product (GNP) correlation between countries and the level of the economic development of a target country. A random sample of 165 international mergers and acquisitions by Malaysian bidding MNCs in 22 countries around the world in the period of 2000-2010 was recruited for this study. A negative relationship between the foreign economic condition and the wealth effect and a positive relationship between the level of economic development of target country and the wealth effect has been found through this study. This implies that the foreign economic condition and level of economic development of the target country significantly determine the value creation of the Malaysian cross-border acquisitions. Therefore, Malaysian MNCs, which intend to use the acquisition mode of entry as the way to venture abroad, should take into consideration these macroeconomic factors in order to increase their foreign investment value.

DOI: http://dx.doi.org/10.5755/j01.ee.26.5.11418

Author Biographies

Bany Ariffin Amin Noordin, Faculty of Economics and Management, Universiti Putra Malaysia, 43400 Serdang, Selangor Darul Ehsan, Malaysia.

Assoc. Prof. Dr. Bany Ariffin Amin Noordin is an Associate Professor at the Department of Accounting and Finance, Faculty of Economics and Management, Universiti Putra Malaysia. He holds a Doctor of Business Administration (DBA) qualification in the area of Corporate Finance from the National University of Malaysia in 2006. He has a Master degree in Finance and Bachelor of Business Administration majoring in Finance and Economics from University of Oklahoma, USA. His scholarly articles have been published in reputable international and local academic journals. Among those are Managerial Finance, International Review of Financial Analysis Journal, Studies in Economics and Finance, Asian Economics Review, Asia Pacific Journal of Economics and Business. His current research interests include corporate finance, firm’s internationalization process, ownership structure, asset valuation and corporate governance

Fakarudin Kamarudin, Faculty of Economics and Management Universiti Putra Malaysia 43400 Serdang Selangor Darul Ehsan. Malaysia

Dr. Fakarudin Kamarudin is a Senior Lecturer at the Faculty of Economics and Management, Universiti Putra Malaysia (UPM). He obtained his Ph.D majoring in Finance from UPM in 2015. He has a Master of Science (MSc) in Finance in 2010 from the same university. He currently conducts lectures on Financial Management and Statistic for Accounting and Finance.

Nazratul Aina Mohamad Anwar, Putra Business School, Universiti Putra Malaysia, 43400 Serdang, Selangor Darul Ehsan Malaysia

Dr. Nazratul Aina Mohamad Anwar is the founder of the Positive Vibes Training & Consultancy. She is a part time lecturer at Faculty of Business School, University Kuala Lumpur (UniKL). She holds a Doctor of Philosophy  (Ph.D) qualification in the area of Accounting from the Universiti Putra Malaysia (UPM) in 2015. She obtained her Master of Science (MSc) majoring in Accounting from UPM in 2010.

Additional Files

Published

2015-12-23

Issue

Vol. 26 No. 5 (2015)

Section

ECONOMICS OF ENGINEERING DECISIONS