Effects of the Largest Shareholder Stakes on Malaysian Acquiring Firms' Performance
- 1 January 2007
- preprint
- Published by Elsevier BV in SSRN Electronic Journal
Abstract
This paper examines the relationship between the ownership stakes of the largest shareholders and the post-take-over operating performance and firm values of the acquiring firms. It was found that the operating performance as measured by the control-adjusted cash flow returns rose as the largest ownership stakes increased. However, when the dominant owners obtained a very high level of ownership stakes, the operating performance deteriorated. This shows that at lower level of ownership stakes, ownership concentration aligns the interests between controlling owners and shareholders. In contrast, when the dominant owner had absolute control over the firm, there was a potential of expropriation of minority shareholders by the controlling owners. Nevertheless, the market-based assessment failed to substantiate the hypothesis.This publication has 23 references indexed in Scilit:
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