Corporate restructuring and value creation : an empirical study of Thai firms | |
| Author | Visit Ongpipattanakul |
| Call Number | AIT Diss. no.DBA-SOM-12-03 |
| Subject(s) | Corporate reorganizations--Thailand Consolidation and merger of corporations--Management |
| Note | A dissertation submitted in partial fulfilment of the requirements for the Degree of Doctor of Business Administration |
| Publisher | Asian Institute of Technology |
| Abstract | Thailand experienced a financial crisis in mid-1997. Firms in Thailand have responded to performance and valuation decay by using a variety of corporate restructuring strategies. Restructuring strategies are complicated processes, which affects both the selection and the effectiveness of the strategies used. Restructuring strategy choices are influenced by and interact with the agreements and conflicts of interest among stakeholders and the surrounding environment. The central objective of this research is to examine the relationship and interaction between firms’ restructuring strategies and agency monitoring factors and their implications for value creation. We have followed both qualitative and quantitative approaches in this study. The quantitative methods include logistic regression and linear regression analyses. For a sample of 120 Thai non-financial companies, listed on the Stock Exchange of Thailand (SET) and experiencing a performance decline for two consecutive years during 1997-2008, the study analyzes seven agency factors and sixteen restructuring strategies that have been explored under prior studies. A total of one thousand two hundred and fourteen observations are studied. The statistical results of logistic regression show that restructuring strategy choices are significantly influenced by both agency variables, their interactions and control variables. The first empirical test is on agency factors and their interactions, and their influence on the choice of restructuring strategies. The overall results show statistical significance. The statistical test of single agency factor and the interaction effects among them provide an insight into understanding the agreements and conflicts of interest between stakeholders on restructuring choices. This behavior may not be explicit in the regression of a single agency variable alone. The second empirical test is on the influence of restructuring strategies on firms’ performances. The regression results based on agencies preference are inconclusive on value creation and improving operating performance of the firms based on agencies’ preferences. The regression indicates that restructuring strategies show a greater response to changes in price-to-book value ratio than operating measurement. This may reflect the ineffectiveness of the implementation of restructuring strategies. The ineffectiveness may be derived from agreements and conflicts of interest in agency behavior that may prohibit firms from creating more value and reversing performance decline. The case study on Banpu Public Company and IRPC Public Company provides some understanding into the different ways in which restructuring activities add value and how the market reacts to their turnaround strategies. The cases provide understanding of the interaction of restructuring strategies, support from stakeholders and the surrounding environment such as the condition of the capital market. The managerial implication of this study is to help managers to understand a firm’s behavior in choosing restructuring strategies. This study provides a long-term assessment of the restructuring strategies in which companies respond to performance decline through the restructuring of their assets, liabilities and management. The empirical results can be used as effective guidance in determining which strategies are appropriate for a firm to recover its iv financial and operating positions. Managers might then be able to assess the expected restructuring actions in terms of value created, operating performance, the estimated length of time, the chance of survival and the interactions among strategies in combinations. |
| Year | 2012 |
| Type | Dissertation |
| School | School of Management |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Doctor of Philosophy in Business Administration (Publication code = DBA-SM, SM) |
| Chairperson(s) | Pandey, Indra M.; |
| Examination Committee(s) | Arun Kumar;Teerapat Sanguankotchakor; |
| Degree | Thesis (Ph.D.) - Asian Institute of Technology, 2012 |