Acquisition probability, financing, duration, and stock return: the role of leverage deviation in Malaysia

This study investigates the impact of leverage deviation in pre-acquisition year on acquisition decision, financing, duration, and stock returns based on empirical evidence from merger and acquisitions (M&As) by Malaysian non-financial listed firms during the period 2001-2018. The different impa...

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Main Author:	Al-Sabri, Haithm Mohammed Hamood
Format:	Thesis
Language:	eng eng eng
Published:	2021
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/10419/1/depositpermission-not%20allow_s901934.pdf https://etd.uum.edu.my/10419/2/s901934_01.pdf https://etd.uum.edu.my/10419/3/s901934_02.pdf
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id	my-uum-etd.10419
record_format	uketd_dc
spelling	my-uum-etd.104192023-03-19T02:13:21Z Acquisition probability, financing, duration, and stock return: the role of leverage deviation in Malaysia 2021 Al-Sabri, Haithm Mohammed Hamood Nordin, Norhafiza Kadir, Hanita School of Economics, Finance & Banking School of Economics, Finance & Banking HG Finance This study investigates the impact of leverage deviation in pre-acquisition year on acquisition decision, financing, duration, and stock returns based on empirical evidence from merger and acquisitions (M&As) by Malaysian non-financial listed firms during the period 2001-2018. The different impacts between overleveraged and underleveraged firms are also examined using probit model, multinomial logit, quantile regression model, and OLS regression. Besides the previous evidence from the developed markets, Malaysian firms are also considering the leverage deviation factor for their acquisitions plan. Findings from this study show that, there is an interdependence between pre-acquisition leverage deviation and acquisitions behaviours by Malaysian firms. Specifically, leverage deviation affects the acquisition probability negatively where underleveraged firm shows higher likelihood to engage in M&A activities. Thus, it proves that both trade-off theory and pecking order theory are relevant to acquisition financing which suggest that overleveraged acquirers tend to use stock financing to reduce their leverage deviation while underleveraged acquirers prefer to use internal funds over external sources. Moreover, leverage deviation also significantly affects acquisition duration where overleveraged (underleveraged) acquirers take longer (shorter) duration to complete their transactions. Finally, leverage deviation also affects the acquisition abnormal stock return positively. The findings from this study provide insights to managers and investors regarding the impact of targeting behaviours on corporate takeover decisions and outcomes. Leverage deviation in the pre-acquisition year can be an indicator for acquisition likelihood, financing options, acquisition duration, and acquisition stock return. Also, acquisitions by overleveraged firms are more related to synergy and targeting rather than agency motives. Furthermore, this study is expected to be useful to policymakers to enhance M&A activities in the market by facilitating flexible financing options for financial constrained firms and improve regulations to ensure a minimum level of efficiency for the negotiation of acquisitions. 2021 Thesis https://etd.uum.edu.my/10419/ https://etd.uum.edu.my/10419/1/depositpermission-not%20allow_s901934.pdf text eng staffonly https://etd.uum.edu.my/10419/2/s901934_01.pdf text eng staffonly https://etd.uum.edu.my/10419/3/s901934_02.pdf text eng staffonly other doctoral Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng eng
advisor	Nordin, Norhafiza Kadir, Hanita
topic	HG Finance
spellingShingle	HG Finance Al-Sabri, Haithm Mohammed Hamood Acquisition probability, financing, duration, and stock return: the role of leverage deviation in Malaysia
description	This study investigates the impact of leverage deviation in pre-acquisition year on acquisition decision, financing, duration, and stock returns based on empirical evidence from merger and acquisitions (M&As) by Malaysian non-financial listed firms during the period 2001-2018. The different impacts between overleveraged and underleveraged firms are also examined using probit model, multinomial logit, quantile regression model, and OLS regression. Besides the previous evidence from the developed markets, Malaysian firms are also considering the leverage deviation factor for their acquisitions plan. Findings from this study show that, there is an interdependence between pre-acquisition leverage deviation and acquisitions behaviours by Malaysian firms. Specifically, leverage deviation affects the acquisition probability negatively where underleveraged firm shows higher likelihood to engage in M&A activities. Thus, it proves that both trade-off theory and pecking order theory are relevant to acquisition financing which suggest that overleveraged acquirers tend to use stock financing to reduce their leverage deviation while underleveraged acquirers prefer to use internal funds over external sources. Moreover, leverage deviation also significantly affects acquisition duration where overleveraged (underleveraged) acquirers take longer (shorter) duration to complete their transactions. Finally, leverage deviation also affects the acquisition abnormal stock return positively. The findings from this study provide insights to managers and investors regarding the impact of targeting behaviours on corporate takeover decisions and outcomes. Leverage deviation in the pre-acquisition year can be an indicator for acquisition likelihood, financing options, acquisition duration, and acquisition stock return. Also, acquisitions by overleveraged firms are more related to synergy and targeting rather than agency motives. Furthermore, this study is expected to be useful to policymakers to enhance M&A activities in the market by facilitating flexible financing options for financial constrained firms and improve regulations to ensure a minimum level of efficiency for the negotiation of acquisitions.
format	Thesis
qualification_name	other
qualification_level	Doctorate
author	Al-Sabri, Haithm Mohammed Hamood
author_facet	Al-Sabri, Haithm Mohammed Hamood
author_sort	Al-Sabri, Haithm Mohammed Hamood
title	Acquisition probability, financing, duration, and stock return: the role of leverage deviation in Malaysia
title_short	Acquisition probability, financing, duration, and stock return: the role of leverage deviation in Malaysia
title_full	Acquisition probability, financing, duration, and stock return: the role of leverage deviation in Malaysia
title_fullStr	Acquisition probability, financing, duration, and stock return: the role of leverage deviation in Malaysia
title_full_unstemmed	Acquisition probability, financing, duration, and stock return: the role of leverage deviation in Malaysia
title_sort	acquisition probability, financing, duration, and stock return: the role of leverage deviation in malaysia
granting_institution	Universiti Utara Malaysia
granting_department	School of Economics, Finance & Banking
publishDate	2021
url	https://etd.uum.edu.my/10419/1/depositpermission-not%20allow_s901934.pdf https://etd.uum.edu.my/10419/2/s901934_01.pdf https://etd.uum.edu.my/10419/3/s901934_02.pdf
_version_	1776103813151719424

Acquisition probability, financing, duration, and stock return: the role of leverage deviation in Malaysia

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