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The Determinant of the Possibility of Merger in Indonesia

Author

Listed:
  • Devina Ivo Mahendra

    (Faculty of Economics, Universitas Negeri Surabaya, Indonesia,)

  • Nadia Asandimitra Haryono

    (Faculty of Economics, Universitas Negeri Surabaya, Indonesia,)

Abstract

The company will not easily eliminated if they did right strategy, such as decided to do a corporate action instance expansion. The decision of the company doing the merger increased every year in the period 2010-2013 compared to other mutual policies, such as the rights issue and stock split. The purpose of this research was to analyze the influence of liquidity, leverage and profitability to the possibility of merging the companies listed on the stock exchange on the period. This research uses a quantitative approach with secondary data. Using 54 samples, consist of 27 companies that merged and do not merger which categorized using dummy variables. The results of hypothesis testing using a binary logistic regression analysis proves only that profitability that proxy by return on equity and leverage that proxy by debt to equity ratio affect the possibility of merger of the company.

Suggested Citation

  • Devina Ivo Mahendra & Nadia Asandimitra Haryono, 2017. "The Determinant of the Possibility of Merger in Indonesia," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 62-68.
    • Handle: RePEc:eco:journ1:2017-03-10
    as

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    References listed on IDEAS

    as
    1. Sorensen, Donald E., 2000. "Characteristics of merging firms," Journal of Economics and Business, Elsevier, vol. 52(5), pages 423-433.
    2. Espahbodi, Hassan & Espahbodi, Pouran, 2003. "Binary choice models and corporate takeover," Journal of Banking & Finance, Elsevier, vol. 27(4), pages 549-574, April.
    3. Abbas, Qamar & Hunjra, Ahmed Imran & Azam, Rauf I & Ijaz, Muhammad Shahzad & Zahid, Maliha, 2014. "Financial performance of banks in Pakistan after Merger and Acquisition," MPRA Paper 60790, University Library of Munich, Germany.
    4. Wansley, James W. & Roenfeldt, Rodney L. & Cooley, Philip L., 1983. "Abnormal Returns from Merger Profiles," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 18(2), pages 149-162, June.
    5. Nuria Alcalde & Manuel Espitia, 2003. "The Characteristics of Takeover Targets: The Spanish Experience 1991–1997," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 7(1), pages 1-26, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Merger; Profitability; Variable Dummy; Binary Logistic Regression;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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