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

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.