Mergers and Acquisitions and Success Factors in Thailand
This paper studies the impact of completed M&A deals in Thailand from January 1, 2000 to December 31, 2014 on target’s financial performance proxied by cumulative abnormal returns (CAR). Specifically, as part of the research questions, it first tests whether there is a statistical CAR difference before and after the announcement of the completion of the deals. Secondly, it examines the six main factors that explain the target’s financial performance (proxied by CAR), one year, two years, and three years after the announcement. These factors include cultural differences, corporate governance, payment method, contagion and capacity effect, institutional ownership, and inside ownership. The results show that there is a statistical difference between the standardized CAR 120 days before and after the announcement date. Furthermore, the contagion effect on efficiency (proxied by the ROE and ROA), inside ownership in targets, and target’s size are significant factors for the higher CAR after completion of the M&A for all years. The other factors are statistically insignificant as all listed companies in Thailand are required to have good governance and most M&A deals use cash payments. Moreover, since cross-border M&As in Thailand during that period were a rare occurrence and still at an initial stage, cultural differences are also not a factor. Future research studies should be conducted when more recent M&A data becomes available.