Open AccessShareholder wealth effects and corporate name change: Evidence from Malaysia
Author(s) -
Yusuf Karbhari,
Zulkarnain Muhamad Sori,
Shamsher Mohamad
Publication year - 2004
Publication title -
corporate ownership and control
Language(s) - English
Resource type - Journals
eISSN - 1810-0368
pISSN - 1727-9232
DOI - 10.22495/cocv2i1p3
Subject(s) - restructuring , shareholder , business , accounting , event study , sample (material) , abnormal return , corporate governance , finance , paleontology , context (archaeology) , chemistry , chromatography , stock exchange , biology
This study seeks to evaluate the shareholder wealth effect of corporate name change by Malaysian listed companies. Our sample comprises both failed and non-failed Malaysian companies and standard event study methodology is employed. Our results indicate that corporate name changes have no impact on shareholder wealth unless the announcement is accompanied with news of approved corporate restructuring by Malaysian regulatory authorities. In addition, extraordinary abnormal returns were found on the announcement day for the failed companies group whilst, the sub-sample of non-failed companies experienced a significant low negative abnormal return around the announcement date indicating disapproval of cosmetic name changes. Investors in Malaysia are generally cautious about receiving news of a corporate name change. The study also suggests that the market cannot be fooled by mere name change; such a change must be backed by serious efforts towards recovery.