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Cogent Business & ManageMent 2025, VoL. 12, no. 1, 2580684

What can we learn from mergers and acquisitions (M&A) in ASEAN? The role of family ownership and accounting conservatism

Ali riza Fahlevia,b , Budi Frensidyb , Ancella Anitawati hermawanb and Aria Farah Mitab aDepartment of accounting, Faculty of economics and Business, telkom university, Bandung, indonesia; bDepartment of accounting, Faculty of economics and Business, universitas indonesia, Depok, indonesia

ABSTRACT over the past three decades, mergers and acquisitions (M&A) have emerged as a widely adopted strategic approach for firms seeking to enhance performance, expand into new markets, and strengthen competitiveness. however, many transactions fail to deliver the expected benefits, with failure rates estimated at 70%- 80%. this study examines the influence of family ownership, which represents a prominent organizational characteristic in southeast Asia, on post-acquisition performance. Drawing on a dataset of 355 transactions involving publicly listed firms in indonesia, Malaysia, and singapore from the years 2000 to 2019, the results show that family ownership is positively associated with improved post-M&A performance. the study also investigates the moderating role of accounting conservatism. the results indicate that conservative financial reporting enhances the positive effect of family ownership by promoting transparency, reducing risk, and facilitating more effective post-deal integration. these findings remain robust across multiple sensitivity analyses, including alternative measures of performance and accounting conservatism, as well as controls for endogeneity. this study contributes to the limited M&A literature in emerging markets and offers practical insights for investors and policymakers on how family-oriented governance and conservative reporting practices can enhance the success of M&A activities in southeast Asia.

1.  Introduction

Mergers and acquisitions (M&A) remain a fundamental corporate strategy for firms aiming to access new resources, expand into untapped markets, and enhance competitive positioning in domestic and inter- national arenas. By pursuing M&A, companies can acquire valuable assets and accelerate their entry into global markets (steigenberger, 2017; Xie et  al., 2013). such corporate actions are theoretically expected to improve firm value and operational efficiency.

however, empirical evidence frequently contradicts these expectations. numerous studies suggest that more than half of M&A deals fail to achieve the desired improvements in post-acquisition performance (coccorese & Ferri, 2020). this persistent gap between theoretical promise and practical outcome has prompted extensive scholarly investigation into the factors determining M&A success. prior research has examined various dimensions, including the target’s listing status (Kruse et  al., 2007), growth opportuni- ties (paustian-underdahl et  al., 2017; Zanskas, 2017), industry relatedness (Alhenawi & stilwell, 2019), tax implications (Blouin et  al., 2021; Zhang et  al., 2023), country-specific characteristics (Zhou et  al., 2024), financing methods (Al-Khasawneh et  al., 2020; hussaini et  al., 2023; ladkani & Banerjee, 2012), and prior M&A experience (cuypers et  al., 2017; reynolds & teerikangas, 2016; Zhou et  al., 2023). Despite these efforts, M&A outcomes remain context-dependent, underscoring the importance of investigating less-explored institutional and cultural settings.

© 2025 the author(s). Published by informa uK Limited, trading as taylor & Francis group

CONTACT ali Riza Fahlevi [email protected]; [email protected] Department of accounting, Faculty of economics and Business, telkom university, Bandung, indonesia.

https://doi.org/10.1080/23311975.2025.2580684

this is an open access article distributed under the terms of the Creative Commons attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. the terms on which this article has been published allow the posting of the accepted Manuscript in a repository by the author(s) or with their consent.

ARTICLE HISTORY received 11 May 2025 revised 24 August 2025 Accepted 22 october 2025

KEYWORDS Family ownership; performance; mergers and acquisitions; accounting conservatism; Asia

SUBJECTS Business, Management and Accounting; Finance; economics

2 A. r. FAhlevi et Al.

Most of the existing evidence is derived from developed economies, where corporate governance mechanisms and investor protections differ markedly from those in emerging markets. southeast Asia, in particular, represents a compelling yet underexplored context. the region has witnessed sustained economic expansion, averaging gDp growth of 5–6% in the past decade, and a steady rise in M&A transactions. crucially, corporate behavior in southeast Asia is shaped not only by regulatory frame- works but also by cultural norms such as collectivism, hierarchical authority, and intergenerational continuity.

in southeast Asia, corporate behaviour is influenced not only by regulatory factors but also by deep-rooted cultural values such as collectivism, respect for hierarchical authority, and long-term orien- tation. ownership structures in many firms are highly concentrated, with family-controlled businesses being particularly prominent (la porta et  al., 1997). these firms often prioritize intergenerational succes- sion, strategic continuity, and the preservation of socioemotional wealth, which can significantly impact M&A decisions and outcomes. As Meglio and King (2019) highlight, family-controlled firms typically use M&A to secure succession and ensure long-term control, in contrast to the short-term performance focus common in non-family businesses. these characteristics imply that family firms tend to undertake M&A with greater strategic foresight and caution, which may lead to improved post-acquisition performance.

Despite these theoretical advantages, empirical evidence on M&A performance in family-controlled firms remains inconclusive. on one hand, family acquirers often outperform their non-family counterparts due to their long-term orientation and lower inclination toward value-destroying acquisitions (Ben‐Amar & André, 2006). on the other hand, the concentrated ownership that mitigates type i agency problems (between managers and shareholders) may also exacerbate type ii agency risks, where controlling fami- lies prioritize private benefits over the interests of minority shareholders (Dharwadkar et al., 2000; renders & gaeremynck, 2012). these challenges, including potential entrenchment, reduced transparency, and the extraction of private benefits, are especially relevant in complex and high-stakes transactions such as M&A. As a result, understanding the influence of family ownership on post-M&A outcomes requires a context-specific approach, particularly in emerging markets where formal investor protections and gov- ernance mechanisms may be limited.

using delta-adjusted return on assets (ΔroA) as the primary proxy for post-M&A performance, this study presents robust empirical evidence that family ownership positively influences firm outcomes fol- lowing M&A. the results indicate that family-controlled firms tend to outperform non-family firms after M&A transactions, largely due to their distinct governance characteristics. these include a long-term ori- entation, strong alignment between ownership and control, and a consistent focus on strategic continu- ity. the analysis also emphasizes the important role that family involvement plays in facilitating effective post-merger integration, decision-making, and the creation of sustainable value.

this study further extends the literature by incorporating accounting conservatism as a governance mechanism in M&A settings. While prior work has explored conservatism in relation to corporate acqui- sitions (Kravet, 2014), its interaction with family ownership in emerging markets remains largely unex- plored. For family firms in southeast Asia, conservative financial reporting can act as a counterbalance to concentrated ownership, constraining excessive risk-taking and improving transparency (Ball & shivakumar, 2005; laFond & Watts, 2008).

in this context, accounting conservatism supports the integrity of financial reporting and moderates the impact of concentrated ownership on M&A performance. By encouraging a cautious approach to risk and ensuring that financial risks are thoroughly assessed, it enhances transparency and reduces the like- lihood of overestimating potential gains, a common issue in high-stakes M&A transactions. As such, accounting conservatism serves as a critical governance mechanism, helping family firms navigate the complexities of M&A activities and achieve better post-deal performance.

Building on these theoretical insights, the results of this study indicate that accounting conservatism amplifies the positive impact of family ownership on post-M&A outcomes. specifically, family-owned firms implementing conservative accounting practices are better equipped to manage the risks of M&A transactions. the disciplined financial reporting and cautious risk-taking associated with accounting con- servatism enhance decision-making, particularly in high-stakes M&A activities. these findings hold robust across various sensitivity tests, including alternative measures of firm performance and accounting con- servatism, as well as controls for endogeneity.

cogent Business & MAnAgeMent 3

this study focuses on indonesia, Malaysia, and singapore, three southeast Asian economies that have experienced sustained M&A activity alongside a high prevalence of family-controlled firms (rahim & Ali, 2016). these countries are key players in the regional economy and offer institutional diversity that enriches the empirical analysis. singapore, with its mature capital markets and robust regulatory over- sight, serves as a benchmark for high institutional quality. Malaysia, with its strong family business tra- ditions and moderate investor protections, operates within a transitional governance environment. indonesia reflects the dynamics of a large, rapidly growing emerging economy with concentrated own- ership structures and evolving regulatory systems. this variation allows the study to capture how differ- ences in legal enforcement, investor protections, and cultural norms influence the relationship between family ownership and accounting conservatism on post-M&A performance. the selection of these coun- tries offers both conceptual and practical value for investigating governance-based heterogeneity in M&A outcomes.

this research makes several key contributions. First, it expands theoretical understanding by integrat- ing agency theory with family business literature, specifically addressing the often-overlooked type ii agency problem in M&A settings. second, it introduces accounting conservatism into the strategic decision-making domain of M&As, an area largely absent in prior empirical studies. third, by focusing on southeast Asia, the study offers contextual insights into how emerging market dynamics and insti- tutional environments shape the effectiveness of governance mechanisms in family firms. Finally, the findings provide practical implications for policymakers, investors, and corporate advisors, highlighting how family ownership can enhance M&A outcomes and how accounting conservatism can serve as an effective risk control mechanism. in doing so, this study not only fills a significant gap in the literature but also responds to calls for more regionally relevant, governance-focused, and theoretically grounded analyses of M&A performance. it demonstrates that the success of M&As in family firms is not solely a function of ownership type but also of the governance structures that support strategic financial decisions.

the remainder of the paper proceeds as follows. section 2 discusses the literature and develops the hypothesis. section 3 describes data and methodology. section 4 presents the results and discussion. section 5 summarizes our main findings and provides concluding remarks.

2.  Literature review and hypothesis development

2.1.  Family ownership and post-M&A performance

in recent years, companies in emerging markets have increasingly engaged in M&A, both domestically and internationally. this shift reflects a broader transformation in global business dynamics, with emerg- ing economies rising as significant players in cross-border transactions, moving beyond their traditional role as mere consumers of foreign investment (hoskisson et  al., 2013). A key feature of firms in these markets is concentrated ownership, particularly within family-controlled businesses, which dominate eco- nomic growth and strategic decision-making (la porta et  al., 1997).

Family businesses play a significant role in the global economy and contribute meaningfully to eco- nomic development. in the united states, more than 30% of large corporations included in the s&p 500 are controlled or managed by families (Anderson & reeb, 2003). in emerging markets, family firms fre- quently adopt ambitious growth strategies, with mergers and acquisitions serving as a key avenue for expanding market reach. Despite these efforts, family firms often encounter governance-related chal- lenges, particularly conflicts between dominant family owners and minority investors, which can adversely affect financial performance (Bennedsen et  al., 2008; villalonga & Amit, 2006).

these conflicts, often driven by personal or socioemotional objectives, can hinder effective decision-making, particularly in high-stakes situations such as M&A. Family firms prioritize socioemotional wealth, which includes maintaining family legacy, preserving control, and ensuring internal cohesion, rather than focusing solely on financial outcomes (gomez-Mejia et  al., 2018). this emphasis on non-economic goals may lead family firms to avoid acquisition opportunities that are financially promis- ing but perceived as risky, ultimately resulting in decisions that prioritize long-term stability over short-term gains.

4 A. r. FAhlevi et Al.

Moreover, family firms are typically more risk-averse and tend to adopt a cautious approach to corpo- rate expansion through acquisitions (geppert et  al., 2013). this conservative strategy helps minimize the risk of poor investment decisions and reduces the likelihood of overvaluing potential targets. however, such prudence may limit opportunities to unlock strategic synergies or pursue assertive growth in new markets. over time, this restrained approach can hinder the firm’s ability to fully capitalize on transfor- mative opportunities, potentially restricting its long-term performance and competitive positioning (hayward & hambrick, 1997; roll, 1986).

Despite these challenges, family-controlled firms benefit from strong organizational commitment, long-term stability, and a desire to preserve family ownership. these qualities enhance their ability to manage risks and make more strategic decisions (gómez-Mejía et  al., 2007). this is particularly evident in the context of M&A, where family firms often take a more cautious, calculated approach. Family own- ership tends to correlate with focusing on sustainable growth, risk management, and avoiding decisions that could jeopardize the family’s control and the company’s long-term success.

the socio-emotional Wealth (seW) theory suggests that family firms prioritize emotional attachment to the business and long-term stability over short-term financial gains. As a result, family firms are more risk-averse and conservative when making strategic decisions, including M&A activities. this conservatism is reflected in their careful selection of acquisition targets, thorough due diligence, and a strong focus on post-M&A integration. By prioritizing continuity and long-term stability, family-controlled firms are likely to manage M&A transactions more effectively and achieve superior post-M&A performance (geppert et  al., 2013).

Building on the seW framework and recognizing the unique characteristics of family ownership, we hypothesize that family-controlled firms are better positioned to achieve superior post-M&A performance. their governance mechanisms, long-term orientation, and focus on maintaining control enable them to navigate the complexities of M&A transactions more effectively. Moreover, the stability afforded by family ownership contributes to stronger integration capabilities, which are critical for post-M&A success. therefore, we propose the following hypothesis:

Hypothesis 1: Family ownership is positively associated with post-M&A performance

2.2.  Family ownership, accounting conservatism, and post-M&A performance

previous research on family-owned businesses often emphasizes their advantages over other organiza- tional forms. however, unlike non-family firms that typically face agency conflicts between managers and shareholders (type i), family-owned firms are particularly exposed to a different set of challenges. in these firms, dominant shareholders may prioritize personal or familial interests over those of minority stakeholders, leading to what is known as type ii agency conflicts. such conflicts can generate significant governance-related costs and ultimately constrain the firm’s ability to achieve optimal economic perfor- mance (Adhikari & sutton, 2016).

Building on this, managers play a pivotal role in shaping strategic outcomes by conveying critical information about potential opportunities or risks. Yet, managers may also withhold or selectively report negative information in situations that threaten long-term sustainability, driven by opportunism or personal incentives. this behavior increases the risk of flawed strategic decisions, especially during complex transactions like M&A, where biased risk assessments can lead to suboptimal performance (Ahmed & Duellman, 2011; Francis & Martin, 2010). Moreover, recent evidence from Asian markets demonstrates that acquirer performance is not only influenced by managerial discretion but also by the broader governance structures and institutional environments in which firms operate (Ahmed et  al., 2023).

to mitigate these risks, accounting conservatism is widely recognized as a key governance mecha- nism. its enduring relevance in financial reporting (sterling, 1990) stems from its emphasis on prudence, which requires recognizing potential losses promptly while delaying the recognition of gains. in this way, conservatism reduces the risk of overstating firm value, constrains managerial discretion, and enhances the credibility of financial disclosures (guay & verrecchia, 2018).

cogent Business & MAnAgeMent 5

nonetheless, the meaning and function of accounting conservatism are subject to academic debate. one perspective views it as a reactive governance response, particularly effective in firms with high agency risk and weak oversight, where it serves to discipline managerial behavior through timely loss recognition (Ball & shivakumar, 2005). Another line of thought considers conservatism a proactive choice by firms with robust governance systems to promote transparency and build stakeholder trust (chi et  al., 2009). in contrast, alternative interpretations suggest that conservatism may be externally imposed, driven more by creditor demands or institutional norms than internal governance intent (roychowdhury & Watts, 2007). Moreover, excessive conservatism can create inefficiencies, such as investment delays, understated firm performance, and missed growth opportunities, which are particularly problematic in dynamic industries or during high-stakes transitions like M&A. these varying interpretations underscore the need to treat accounting conservatism as a nuanced and context-dependent construct rather than a universal indicator of good governance.

in the case of family firms, accounting conservatism takes on heightened relevance. these firms often operate with concentrated ownership and are guided by strong socioemotional goals, both of which influence their approach to financial reporting. Although agency problems may still exist, family firms are generally more inclined to adopt conservative accounting practices during critical corporate events such as mergers and acquisitions. this tendency is driven by two main considerations. First, their long-term perspective and emphasis on preserving the family legacy encourage prudent financial behavior aimed at sustaining value across generations. goh et al. (2017) found that family firms often engage in conser- vative reporting to protect their reputation and support continuity. second, M&A typically attracts increased scrutiny from external stakeholders such as creditors and investors, creating incentives for transparency and cautious financial disclosures. penalva and Wagenhofer (2019) emphasize that conser- vatism improves debt contracting and helps reduce information asymmetry, essential when firms navi- gate complex and uncertain transactions.

therefore, accounting conservatism in family firms should not be seen solely as a reflection of strong governance but rather as a multifaceted outcome shaped by internal risk aversion, external expectations, and strategic motivations. its presence may reinforce the positive effects of family ownership on post-M&A performance by enhancing transparency, limiting downside risk, and strengthening credibility with stakeholders.

Hypothesis 2: Accounting conservatism strengthens the positive relationship between family ownership and post-M&A performance.

Based on the above discussion, this study develops the conceptual framework presented in Figure 1. the framework integrates multiple theoretical perspectives to explain the relationship between family ownership, accounting conservatism, and post-M&A performance in southeast Asia.

Figure 1. Conceptual framework.

6 A. r. FAhlevi et Al.

At the theoretical level, the model draws on agency theory, socioemotional wealth, and gover- nance literature to capture the dual nature of family ownership, which can both mitigate type i agency problems and exacerbate type ii agency risks. At the mechanism level, family ownership is hypothesized to enhance post-M&A performance, with accounting conservatism acting as a gover- nance moderator that constrains managerial discretion, mitigates risk-taking, and strengthens trans- parency. At the outcome level, improved post-M&A performance reflects effective strategic integration and long-term orientation. Finally, the framework highlights the practical relevance of these dynamics by linking them to industrial implications, including value creation, risk mitigation, and stakeholder trust. together, this model demonstrates the study’s dual contribution: advancing theoretical discourse on governance in family firms while offering actionable insights for practitioners and policymakers engaged in M&A activities.

3.  Data and methodology

3.1.  Sample selection and data sources

this study employs a cross-country analysis of publicly listed companies in indonesia, Malaysia, and singapore that participated in M&A activities between 2000 and 2019. publicly listed firms were selected due to the difficulty in obtaining comprehensive accounting and financial data for private companies. the accounting and financial data were sourced from eikon, a platform provided by thomson reuters that offers extensive global deal information, and Bloomberg.

the observation period begins in 2000, a critical year for indonesia, Malaysia, and singapore as they recover from the 1997–1998 Asian financial crisis. Furthermore, 2000 marked the onset of a “defensive wave” in global M&A activity (Alexandridis et  al., 2012), during which companies used M&A to enhance performance and navigate global economic uncertainties. the 19-year observa- tion period was chosen to thoroughly examine how M&A activity evolved and influenced business performance under changing external economic conditions, such as the 2008–2009 global financial crisis. this extended timeframe enables the study to account for various external factors that may influence post-M&A performance, ensuring a comprehensive understanding of the dynamics at play.

the observation period ends in 2019, allowing the study to evaluate post-M&A performance over a three-year window (t + 1, t + 2, t + 3), effectively capturing performance data up to 2022. Focusing on a three-year timeframe helps mitigate short-term volatility and provides insights into the more enduring effects of M&A on firm performance. M&A activities beyond 2019 were excluded due to the significant disruptions in the global business environment, including M&A dynamics, caused by the coviD-19 pandemic (gormsen & Koijen, 2020; narayan et  al., 2021; Xiong et  al., 2020).

M&A by financial firms were excluded from the analysis due to their distinct characteristics, such as different accounting practices, operational structures, regulatory requirements, and investment strategies, which make comparisons with other industries unsuitable (Biddle et  al., 2009). the sample was restricted to M&A deals with a minimum deal value of us$1 million. this threshold was set to exclude smaller transactions that are unlikely to substantially impact the national economy or the firms involved (Moeller et  al., 2004).

For companies that engaged in multiple M&A transactions during the observation period, only the largest or most significant transaction was considered in the analysis. this approach minimizes over- lapping effects and ensures a clearer assessment of M&A’s impact on company performance. table 1 panel Adetails the sample selection process, which, in the final selection, includes 355 M&A deals: 82 in indonesia, 170 in Malaysia, and 103 in singapore. table 1 panel B further provides a breakdown of M&A deals by industry in these three countries. interestingly, the industrial sector dominated M&A transactions in Malaysia and singapore, accounting for 40 and 30 deals, respectively. in indonesia, however, the energy sector led M&A activity, with 16 deals totaling a transaction value of usD 3.9 billion.

cogent Business & MAnAgeMent 7

3.2.  Research model

to investigate the relationship between family ownership and post-M&A performance, as well as the moderating effect of accounting conservatism on this relationship, we estimate the following two empir- ical models: Perform FF ZConrols

i t i t i t i t, , , , = + + +−α β β

1 1 1 2 ε (1)

Perform FF C FF C i t i t scorei t i t scorei t, , , , , = + + + +− − −α β β β

1 1 1 2 1 3 1 ∗ ββ

2 ZConrols

i t i t, , + ε (2)

performance is measured by the company’s financial outcomes over the three years following the M&A. FF represents the percentage of family ownership, while c_score reflects the level of accounting conserva- tism, as determined by the Khan and Watts (2009) model. FF*c_score captures the interaction between family ownership and accounting conservatism. Zcontrol represents a set of control variables that account for M&A-specific, firm-specific, and country-specific characteristics. All estimations include industry and year fixed effects to control for unobserved heterogeneity across firms and time. standard errors are clustered at the firm level.

Table 1. sample selection and M&a distribution by countries and industries. Panel a. sample selection

indonesia Malaysia singapura

total number of M&a activities

687 4455 4071

minus M&a activities with a

transaction value of less than us$1 million.

(151) (1807) (997)

M&a deals involving firms based in the financial sector

(105) (869) (950)

M&a activities that include private companies

(179) (1553) (1780)

the M&a activity that occurs repeatedly, involving the same bidder, over three consecutive years

(153) (16) (151)

a change in company status after an M&a

(13) (23) (10)

M&a activities involving a parent company and its subsidiary, or those that are part of a related-party transaction

(2) (5) (2)

the unavailability of accounting and financial data

(2) (12) (78)

Final sample size 82 170 103 Panel B. M&a Distribution by countries and industries

indonesia Malaysia singapore

industries number of

deals % Deal value (in million us$)

number of deals %

Deal value (in million

us$) number of

deals %

Deal value (in million

us$)

Communication services 7 8,54 1094,13 6 3,53 112,60 3 2,91 8555,64 Consumer Discretionary 8 9,76 68,88 23 13,53 1020,10 12 11,65 86,31 Consumer staples 14 17,07 778,97 26 15,29 492,04 6 5,83 1459,53 energy 16 19,51 3991,53 5 2,94 210,02 8 7,77 887,15 Health Care 4 4,88 815,26 3 1,76 5,63 4 3,88 160,40 industrials 14 17,07 2204,35 40 23,53 1.436,86 30 29,13 1.141,06 Materials 6 7,32 811,60 15 8,82 241,16 4 3,88 172,19 Real estate 13 15,85 743,00 25 14,71 1148,62 17 16,50 5.814,81 utilities – – – 5 2,94 2717,60 6 5,83 1.485,48 information technology – – – 22 12,94 231,84 13 12,62 198,63 total 82 100 10.507,72 170 100 7.616,46 103 100 19.961,20

8 A. r. FAhlevi et Al.

3.2.1.  Proxy for post-M&A performance the dependent variable in this study is post-M&A performance, measured using the Delta-Adjusted return on Assets (ΔroA), a modified approach based on Martynova et  al. (2007). this indicator evaluates a company’s performance before and after an M&A transaction relative to industry benchmarks. roA is calculated as the sum of net profit and interest expense divided by total assets. An alternative roA cal- culation provides a more precise accounting performance measure, mitigating potential biases when the M&A deal is financed through debt.

post-M&A performance is assessed annually over the first, second, and third years following the acqui- sition. these annual performance figures are then compared to the company’s average performance over the three years preceding the M&A to evaluate the transaction’s impact. An M&A is considered value-enhancing if the post-acquisition performance exceeds the industry-adjusted pre-acquisition average.

3.2.2.  Proxy for family firms no single definition of a family firm is universally recognized. however, various approaches have been developed in academic literature to determine whether a firm is family-owned. For example, claessens et  al. (2006) identify family firms by analyzing business groups in which most shareholders are family members. similarly, la porta et  al. (1997) and Faccio et  al. (2001) define family businesses as those where the founder’s family or affiliated individuals hold at least 20% of the shares. this study adopts a modified version of the family ownership measure proposed initially by Arifin (2003).

Arifin (2003) classifies family ownership into four distinct groups. group 1 defines family control as individual shareholders holding at least 5% of shares, along with non-financial companies—domestic or foreign—within the ownership structure. group 2 includes shares owned by individuals without specify- ing a minimum ownership threshold. group 3 combines individual shareholding with ownership by non-financial companies, irrespective of the percentage of shares held. lastly, group 4 defines significant ownership as holdings by individuals or private non-financial firms.

this study refines Arifin’s model by updating the criteria for identifying family ownership. A firm is family-owned if individuals hold at least 5% of its shares or are listed among the majority shareholders. Additionally, the assessment considers ownership by private non-financial corporations and international private non-financial companies. if no shareholders meet these criteria during the data collection pro- cess, family ownership is recorded as 0%.

3.2.3.  Proxy for accounting conservatism A key distinction exists between unconditional and conditional accounting conservatism. unconditional accounting conservatism is the consistent implementation of conservative financial reporting practices that are established accounting principles-based and not influenced by external factors. this approach may reflect managerial incentives or align with the firm’s operational needs. conditional accounting con- servatism refers to the asymmetric recognition of economic gains and losses, where losses are recognized more quickly than gains in response to economic events. this approach reflects a firm’s reaction to exter- nal conditions, ensuring that financial statements incorporate bad news more promptly than good news. We employ the c-score metric developed by Khan and Watts (2009) to measure conditional conservatism, which builds upon Basu (1997) model to quantify the degree of asymmetry in earnings recognition.

EPS P D R D R i i i i i

/ = + + + +β β β β ∗ 1 2 3 4

ε (3)

eps/p is calculated as earnings per share divided by the stock price. R represents stock returns. D is a dummy variable that equals 1 if r < 0 and 0 otherwise. D*R represents the two-way interaction between D and R. εx indicates the error term. β3 measures the timeliness of good news, while β4 measures the incre- mental timeliness of bad news relative to good news, serving as a proxy for the degree of accounting conservatism. the sum of β3 and β4 reflects the overall speed at which a company recognizes good news.

Khan and Watts (2009) expanded on the Basu model by introducing the g-score and c-score. the g-score assesses the firm’s reaction to positive news, whereas the c-score measures its response to neg- ative news, serving as a clear sign of accounting conservatism. According to Khan and Watts (2009), firm

cogent Business & MAnAgeMent 9

size (siZe), the market-to-book ratio (MtB), and leverage (lev) influence a firm’s tendency to recognize good or bad news. these variables are integrated into Basu’s (1997) model, replacing β3 and β4 with the g-score and c-score. the final model is presented in equation 6.

GScore Size MTB Lev i t i t i t i t, , , , = + + +γ γ γ γ

1 2 3 4 (4)

C Score Size MTB Lev i t i t i t i t, , , , = + + +δ δ δ δ

1 2 3 4 (5)

EPS P D R

D R

i i i i i i

i i

/ ( )= + + + + + +

+ +

α γ γ γ γ γ

∗ δ δ 1 1 2 1 2 3 4

1 2

β β Size MTB Lev

SSize MTB Lev i i i i i

i i

Size MTB

Lev D Size

+ +( ) + +

+ + +

δ δ λ λ

λ θ ∗ θ 3 4 1 2

3 4

( ,

55 6 D MTB D LEV

i i i ∗ θ ∗+ +) ε

(6)

MtB denotes the market-to-book, calculated as the equity market value divided by the equity book value. size is the natural logarithm of total assets. lev represents leverage, calculated as total debt divided by total assets. the coefficients δ1, δ2, δ3, and δ4, derived from the regression estimation in equation (6), are employed to compute the c-score, which serves as a proxy for the degree of account- ing conservatism. A higher C-Score suggests a stronger tendency toward conservative financial reporting, as firms with higher C-Score are more likely to quickly and cautiously recognize and incorporate unfavor- able information into their financial statements.

3.2.4.  Control variables this study employs a variety of control variables, divided into three categories: M&A characteristics, firm char- acteristics, and country characteristics. A detailed list of the control variables employed is provided in table 2.

3.2.5.  Summary statistics table 3 panel A presents the descriptive statistics of the main variables used in the analysis. the average post-M&A firm performance is −0.021, with a minimum of −0.773 and a maximum of 1.379. this illus- trates the significant variation in post-acquisition outcomes, with some firms experiencing substantial performance declines and others demonstrating significant improvements. the standard deviation of 0.238 further underscores the heterogeneity in post-M&A performance. Family ownership (FF) averages 35.7%, ranging from 0% to nearly 98%. the median of 37.3% suggests that family ownership is a

Table 2. summary of variable measurements. no. Variables Measurements

M&a characteristics 1 DealValue the natural logarithm of the transaction value in M&a (Fischer, 2017) 2 exp 1 if the bidder has previous experience in M&a transactions before the observation period

(t), and 0 otherwise (Cai et  al., 2022; Felker et  al., 2024; Wu & Reuer, 2021; Zhou et  al., 2023).

3 industryDummy 1 if both the bidder and target firm are in the same industry, and 0 otherwise (nguyen et  al., 2020).

Firm characteristics 4 Firmage the age of company i in year t is calculated as the difference between the observation year

and the year the company was first listed on the stock exchange (Liu et  al., 2024; Zhao & Cai, 2024).

5 FCF the free cash flow divided by total assets (ayash, 2020; Bartov et  al., 2021; Dogru et  al., 2020).

6 Capex the capital expenditure divided by total assets (Custodio, 2014; Dierks et  al., 2018). 7 assetstangibility the Plant, Property, and equipment (fixed assets) divided by total assets (Fang et  al., 2021;

ong & Phing Phing, 2012). Country characteristics 8 Corrupt Corruption is measured by the level of corruption in a country, as quantified by the

Worldwide governance indicators (Wgi), which range from −2.5 to 2.5 (Baik et  al., 2015; Luu et  al., 2019).

9 gDP growth gDP is the gross domestic product growth rate for each country included in the sample (Chiriac, 2021; ibrahim & Raji, 2018; Lobanova et  al., 2018).

10 A. r. FAhlevi et Al.

dominant characteristic in at least half of the sample firms, emphasizing its relevance within corporate ownership structures. the accounting conservatism measure (c_score) has a mean close to zero (−0.022) but spans a wide range from −4.567 to 4.084, with a standard deviation of 1.743. this variability suggests that firms in the sample adopt significantly different conservative accounting practices.

4.  Result and discussion

4.1.  Main results: Family ownerships, the role of accounting conservatism, and post-M&A performance

hypothesis 1 (h1) posits that family ownership positively impacts firm performance following M&A activ- ities. the regression analysis results confirm this hypothesis, revealing a positive effect of family control on firm performance, with a coefficient of 0.040, significant at the 1% level (see table 4, column (1)). this finding highlights the crucial role of family ownership in enhancing firm performance post-M&A.

several factors can justify the findings of this analysis. First, Family-owned firms tend to be more risk-averse, particularly when making high-risk strategic decisions like M&A. this risk aversion stems from apprehensions regarding the potential loss of familial control if the purchase fails (gomez-Mejia et  al., 2018; shim & okamuro, 2011). As a result, family enterprises do more comprehensive planning and due diligence before completing M&A, resulting in more favorable outcomes. second, while agency conflicts exist in all companies, they are typically less pronounced in family firms than in non-family firms (Anderson & reeb, 2003; Basu et  al., 2009). the diminution of agency disputes results in decreased agency expenses, enabling family enterprises to sustain superior post-M&A performance. third, unlike non-family firms prioritizing short-term financial performance, family-owned firms frequently aim to pre- serve and pass on the business to future generations. this long-term perspective encourages a more

Table 3. Descriptive statistics and bivariate correlation. Panel a. Descriptive statistics

mean min p25 median p75 max sD

Perform −0.021 −0.773 −0.078 −0.031 0.025 1.379 0.238 FF (%) 0.357 0.000 0 0.373 0.611 0.979 0.304 C_score −0.022 −4.567 −0.454 −0.065 0.144 4.084 1.743 siZe (in billion us$) 1.284 0.000 0.089 0.258 1.008 25.776 3.068 DealValue (in million

us$) 112.375 1.009 3.8 10.901 39.56 8494.542 548.529

Firmage 12.226 0.000 4 10 16 111 12.507 FCF −0.203 −83.921 −0.046 0.002 0.048 4.979 3.962 Capex 0.046 0.000 0.007 0.029 0.066 0.324 0.052 assetstangibility 0.291 −0.145 0.086 0.242 0.442 1.756 0.242 Corrupt 0.57 −1.137 −0.094 0.213 2.083 2.301 1.082 gDPgrowth 4.442 −5.457 3.936 4.876 5.813 14.52 2.987

Panel B. Bivariate correlation matrix

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

(1) Perform 1.000 (2) FF (%) 0.084* 1.000

(0.010) (3) C_score 0.046 −0.088* 1.000

(0.167) (0.008) (4) DealValue −0.020 0.027 0.048 1.000

(0.540) (0.418) (0.145) (5) Firmage 0.095* −0.117* −0.028 0.132* 1.000

(0.004) (0.000) (0.401) (0.000) (6) FCF 0.003 −0.026 0.007 0.050 −0.041 1.000

(0.920) (0.435) (0.829) (0.126) (0.209) (7) assetstangibility −0.054 0.084* 0.025 0.049 0.012 0.063 1.000

(0.101) (0.010) (0.443) (0.137) (0.718) (0.053) (8) Capex 0.058 0.104* 0.011 0.022 −0.116* 0.037 0.458* 1.000

(0.077) (0.001) (0.729) (0.506) (0.000) (0.261) (0.000) (9) Corrupt −0.061 −0.082* −0.022 0.006 −0.052 0.014 −0.174* −0.137* 1.000

(0.061) (0.012) (0.498) (0.849) (0.115) (0.659) (0.000) (0.000) (10) gDPgrowth −0.026 0.014 0.142* −0.040 −0.048 −0.013 0.006 0.085* −0.115* 1.000

(0.420) (0.674) (0.000) (0.218) (0.142) (0.682) (0.856) (0.010) (0.000)

Note: Label* indicates significant at the 5% level.

cogent Business & MAnAgeMent 11

strategic approach to M&A, where acquisitions are not merely viewed as financial transactions but as opportunities to strengthen the firm’s legacy (Kotlar et  al., 2018).

the findings of this study align with prior research. For instance, Feito-ruiz and Menéndez-requejo (2010) reported that family-owned firms outperform non-family firms post-M&A. similarly, Bouzgarrou and navatte (2013) found that family firms in France and canada exhibit superior post-M&A market per- formance compared to non-family firms. the results substantiate the increasing body of evidence that family control positively impacts post-M&A performance, emphasizing the critical role of family owner- ship in enhancing firm outcomes. thus, h1 is supported.

An analysis of the moderating effect of accounting conservatism (FF(%)*c_score), as presented in table 4, column (2), reveals a positive and statistically significant influence on the relationship between family ownership and post-M&A firm performance, with a coefficient of 0.0249 (significant at the 5% level). this moderation effect provides both theoretical and practical insights, demonstrating how con- servative financial reporting operates as an internal governance mechanism that complements the long-term orientation and risk aversion commonly associated with family-controlled firms. in uncertain environments such as M&A, this combination improves a firm’s ability to avoid target overvaluation, rec- ognize hidden liabilities early, and reduce the risk of failed acquisitions (lara et  al., 2016; Watts, 2003).

theoretically, the findings extend previous research by integrating financial reporting quality into the governance discourse on family firms. While agency theory has largely emphasized ownership structure as a means of reducing managerial opportunism (Jensen & Meckling, 1976), the results here suggest that accounting conservatism provides an additional governance layer. in family firms, this practice serves as

Table 4. the impact of family ownership on post-M&a performance and the moderating role of accounting conservatism.

Variables FF and post-M&a Performance (1) FF, accounting conservatism, and post-M&a

Performance (2)

Ownership structure FF (%) 0.040*** 0.0478*** 0.0425** 0.0613***

(0.0111) (0.0121) (0.0249) (0.0135) Role of accounting

conservatism C_score −0.00458 −0.0277***

(0.00776) (0.0102) FF (%) *C_score 0.0243* 0.0490***

(0.0204) (0.0175) M&A characteristics DealValue −0.00105 0.000137 −0.00661* 7.27e-06

(0.00198) (0.00214) (0.00408) (0.00214) exp 0.00429 0.00163 0.0194 0.00302

(0.00767) (0.00763) (0.0157) (0.00773) industryDummy −0.00519 −0.0105 −0.00787 −0.00885

(0.00689) (0.00692) (0.0141) (0.00698) Firm characteristics Firmage 0.00124*** 0.00123*** −0.00661* 0.00111***

(0.000293) (0.000299) (0.00408) (0.000302) FCF 0.0542* 0.0266 0.0194 0.0342

(0.0419) (0.0420) (0.0157) (0.0423) Capex −0.0238* 0.156* −0.00787 0.166*

(0.0156) (0.0903) (0.0141) (0.0921) assetstangibility 0.249*** −0.0268 0.637*** −0.0254

(0.0880) (0.0169) (0.155) (0.0170) Country characteristics Corrupt −0.000475 −0.000966 −0.0114** −0.00174

(0.00323) (0.00343) (0.00665) (0.00350) gDPgrowth 0.000241 0.000903 −0.00344 0.000807

(0.00119) (0.00134) (0.00242) (0.00134) Constant −0.0279*** −0.0673 −0.0643*** −0.0688

(0.0111) (0.0674) (0.0266) (0.0673) industry Fixed-effect no Yes no Yes Year-Fixed effect no Yes no Yes observations 1,032 1,032 1,016 1,016 R-squared 0.039 0.113 0.046 0.120

Notes: Column (1) reports the regression results for Hypothesis 1, which examines the impact of family ownership on post-M&a performance. Column (2) presents the regression results for Hypothesis 2, which tests the moderating role of accounting conservatism in the relationship between family ownership and post-M&a performance. other control variables are defined in table 2. statistical significance is denoted by asterisks: ***, **, and * indicate significance at the 1%, 5%, and 10% levels, respectively.

12 A. r. FAhlevi et Al.

a self-regulating mechanism that strengthens trust with minority shareholders and external investors through enhanced transparency (Ball & shivakumar, 2005).

practically, conservative accounting practices enhance investor confidence by presenting a cautious and credible view of the firm’s financial condition. Financial statements based on conservative principles signal a lower risk of earnings manipulation and overstatement of assets, which increases the reliability of reported financials. investors tend to respond positively to this transparency, viewing such firms as more stable and financially disciplined.

From a strategic perspective, accounting conservatism encourages more rigorous evaluation of deals and facilitates smoother post-merger integration, increasing the likelihood of successful outcomes. it tempers overoptimistic forecasts, often cited as a reason for poor post-acquisition performance (hayward & hambrick, 1997; roll, 1986). these results align with existing studies that show firms with higher finan- cial reporting quality tend to make more efficient investment decisions (Biddle et  al., 2009).

nonetheless, it is important to consider alternative explanations. Firms that adopt conservative accounting practices may also possess stronger internal control systems, more experienced management teams, or higher-quality external auditors. each of these factors could independently contribute to improved M&A performance (F. chen et  al., 2011; Doyle et  al., 2007). Furthermore, the influence of insti- tutional investors or prevailing market expectations may simultaneously encourage conservative financial reporting and shape acquisition strategies. this overlap complicates efforts to isolate the specific path- way through which accounting conservatism influences post-merger outcomes.

While Kravet (2014) suggested that accounting conservatism may deter high-risk acquisitions with positive net present value, our findings diverge from this perspective. in southeast Asian markets, where institutional enforcement and investor protections are often weaker, accounting conservatism enhances strategic decision-making. rather than suppressing investment activity, conservative accounting practices empower firms to more accurately assess risks and avoid poorly judged transactions, contributing to better M&A outcomes.

overall, these results support hypothesis 2, reinforcing the argument that accounting conservatism enhances the effectiveness of family ownership in M&A contexts by improving decision quality, reducing agency risks, and promoting more cautious financial assessments.

4.2.  Sensitivity tests and additional analyses

4.2.1.  Controlling for endogeneity high levels of family ownership do not emerge randomly; instead, they are shaped by structural factors such as government ideology, the level of corruption, and the quality of corporate governance. in coun- tries with more conservative ideologies, governments often implement permissive policies that foster the growth and dominance of family-owned firms. these policies align with cultural values emphasizing intergenerational wealth transfer, leading firms to favor succession within families—typically to children, relatives, or founders’ descendants.

countries with liberal beliefs, on the other hand, are typically associated with stronger corporate gov- ernance, and they enforce harsher restrictions that limit families’ involvement in corporate decision-making, limiting the spread of family-owned businesses. Family-controlled firms are more prevalent in developing countries than developed ones, which can be attributed to this ideological distinction.

this research applies the two-stage correction procedure developed by heckman (1979) to mitigate potential endogeneity and self-selection bias in the main model. in the first stage, a probit regression estimates a firm’s family-owned probability using instrumental variables such as the number of political parties (pp), governance effectiveness (ge), and leverage. the results of this analysis are reported in table 5. After correcting for endogeneity, the core findings remain consistent, indicating that the main results are robust and not driven by endogeneity concerns.

4.2.2.  Alternative measure of post-M&A performance the validity of the findings regarding the impact of family ownership on post-M&A firm performance is further evaluated by utilizing an alternative performance indicator: ΔroA-0. this measure is derived by

cogent Business & MAnAgeMent 13

subtracting the industry average roA at time t0 from the firm’s roA at t + 1, t + 2, and t + 3. unlike the primary roA proxy, which is calculated as net income plus interest expense divided by total assets, this alternative measure uses earnings before interest, taxes, depreciation, and amortization (eBitDA) divided by total assets.

By incorporating this alternative indicator, the study offers a more comprehensive assessment of the relationship between ownership structure and post-M&A financial outcomes. the regression results, as presented in table 6 column (1), demonstrate the effect of family ownership on post-M&A performance. the findings from this alternative specification align with those of the primary analysis, thereby reinforc- ing the robustness of the study’s conclusions.

4.2.3.  Alternative measure of accounting conservatism this study employs an alternative measure of accounting conservatism, the Ac-score, as proposed by Ball and shivakumar (2005), with improvements by Marzuki and Wahab (2016) for robustness verification. this model rectifies multiple deficiencies in the Khan and Watts (2009) framework employed in the primary analysis. the methodology proposed by Ball and shivakumar (2005) is independent of market returns, therefore reducing any biases stemming from market inefficiencies.

According to this alternate formulation, accounting conservatism is the timely acknowledgment of economic losses while postponing the recognition of gains until they are realized, which should be rep- resented in the firm’s cash flow patterns. consequently, the return variable (r) in the Khan and Watts (2009) model is substituted by cash flow from operations (cFo) in the calculation of the Ac-score.

AC Score CFO MTB Lev

C

i t i i t i t i t i − = + + + + +( )+, , , ,

α β γ γ γ γ 1 1 1 2 3 4

D Size

FFO Size MTB Lev

Size Size Le

i i t i t i

i i t

δ δ δ δ

λ λ λ 1 2 3 4

1 2 3

+ + +( )+ + +

, ,

, ( vv D Size D MTB D Lev

i t i t i t i t i t, , , , , )+ + + + +θ θ θ ε

4 5 6 * * *

(7)

Table 5. endogeneity test.

(1) FF and post-M&a Performance (2) FF, accounting conservatism, and post-M&a

Performance

Variables Baseline model First-stage 2-stage

H1 Baseline model First-stage 2-stage

H2

ownership structure FF (%) 0.0400*** 0.0394*** 0.0425** 0.0560***

(0.0111) (0.0138) (0.0249) (0.0153) Role of accounting

conservatism C-score −0.00458 −0.00690

(0.00776) (0.00792) FF (%)*C-score 0.0243* 0.0409***

(0.0204) (0.0170) instrumental variables PP −0.0454** −0.0448**

(0.0230) (0.0238) ge 0.383 0.449**

(0.255) (0.264) Leverage 0.857*** 0.852***

(0.178) (0.180) inverse-Mills 0.00653 −0.00520

(0.0183) (0.0191) Constant −0.0279*** −1.427*** −0.0544** −0.0643*** −1.561*** −0.0195

(0.0111) (0.377) (0.0291) (0.0266) (0.394) (0.0296) Control Variables Included Included Included Included Included Included Pseudo R2 0.1997 0.1937 observations 1,032 1,032 1,032 1,013 1,016 1,016 R-squared 0.039 0.045 0.046 0.046

Notes: the baseline model in table 5 presents the regression results for the main hypotheses (H1 and H2). the first-stage regression results, reported in Columns (1) and (2), incorporate three instrumental variables: the number of political parties in each country, leverage (calculated as total debt divided by total assets), and government effectiveness (ge). ge represents one of the Worldwide governance indicators (Wgi) developed by the World Bank, which measures the quality of governance. the second-stage regression then uses the predicted values from the first stage to examine the causal effect of family ownership on post-M&a performance and the moderating role of accounting conserva- tism, addressing potential endogeneity concerns. other control variables are defined in table 2. statistical significance is denoted by asterisks: ***, **, and * indicate significance at the 1%, 5%, and 10% levels, respectively.

14 A. r. FAhlevi et Al.

equation (7) presents the regression model used to estimate the Ac-score. to examine the moderat- ing effect of accounting conservatism using this alternative measure, the Ac-score replaces the c-score in the interaction term in equation (2). the results confirm that the positive relationship between family ownership and post-M&A firm performance is amplified by accounting conservatism. these findings are qualitatively consistent with those from the main analysis, thereby reinforcing the robustness of the overall conclusions. the results of this test are reported in column (2) of table 6.

4.2.4.  Sub-sample analyses: Assessing the potential influence of the Covid-19 pandemic on post- M&A performance this study excludes transactions completed between 2017 and 2019 to ensure that the assessment of post-M&A performance is not distorted by the effects of the coviD-19 pandemic, which began in early 2020. the pandemic profoundly disrupted daily life and commercial activity, particularly strategic corpo- rate decisions such as M&A. lee et  al. (2023) found that high mortality rates, widespread infections, and government-imposed restrictions significantly influenced M&A activity. table 7 presents the results of this robustness check. excluding this period does not produce qualitatively distinct outcomes compared to those presented in the primary analysis.

Table 6. the effect of family ownership on post-M&a performance, with alternative measurement of post-M&a perfor- mance & accounting conservatism.

VaRiaBLes (1)

FF and Post-M&a Performance (ΔRoa-0)

(2) FF, accounting Conservatism, and Post-M&a

Performance (Ball & shivakumar, 2005)

ownership structure FF (%) 0.00788* 0.0146*** 0.0340*** 0.0158***

(0.00487) (0.00527) (0.0124) (0.00533) Role of accounting

conservatism C_score −0.00002 −0.00001

(0.00002) (0.00017) FF (%) * C_score 0.000143** 0.0048**

(0.0006) (0.0002) M&a characteristics DealValue 0.00192** 0.00287*** −0.000425 0.00281***

(0.000868) (0.000927) (0.00222) (0.000933) exp 0.00449* 0.00130 0.0122 0.00184

(0.00338) (0.00335) (0.00852) (0.00339) industryDummy 0.00774** 0.00842*** −0.00604 0.00876***

(0.00301) (0.00300) (0.00768) (0.00304) Firm characteristics Firmage −0.0004 0.117*** 0.00126*** 0.117***

(0.00147) (0.0135) (0.000326) (0.0136) FCF 0.0694*** −0.000343 0.0277 −0.000207

(0.00906) (0.00148) (0.0347) (0.00150) Capex −0.0293*** −0.0328*** 0.238*** −0.0303***

(0.00679) (0.00749) (0.0856) (0.00764) assetstangibility 0.259*** 0.260*** −0.000838 0.257***

(0.0328) (0.0340) (0.00363) (0.0348) Country characteristics Corrupt −0.00209* −0.00148 0.238*** −0.00175

(0.00141) (0.00149) (0.0856) (0.00152) gDPgrowth 0.00164*** 0.00128** −0.000838 0.00128**

(0.000520) (0.000583) (0.00363) (0.000584) Constant −0.0218*** 0.0243** 0.238*** 0.0230***

(0.00552) (0.0292) (0.0856) (0.0293) Prob > F 0.000 0.000 0.000 0.000 industry Fixed-effect no Yes no Yes Year-Fixed effect no Yes no Yes observations 1,032 1,017 1,016 1,001 R-squared 0.137 0.198 0,040 0.204

Notes: the regression results for the impact of familsty ownership on post-M&a performance are reported in Column 1 of table 6. ΔRoa-0 is employed as an alternative measure for post-M&a performance. using tahe Ball and shivakumar (2005) model, Column 2 presents the regres- sion results regarding the moderating influence of accounting conservatism on the relationship between family ownership and post-M&a performance. other control variables are defined in table 2. statistical significance is denoted by asterisks: ***, **, and * indicate significance at the 1%, 5%, and 10% levels, respectively.

cogent Business & MAnAgeMent 15

4.2.5.  Post-M&A performance in Indonesia, Malaysia and Singapore to obtain a more comprehensive understanding of M&A implementation in indonesia, Malaysia, and singapore, this study conducted separate tests on the effect of ownership structure on post-M&A com- pany performance in each country. these separate analyses were designed to avoid oversimplifying the role of country-specific characteristics in shaping M&A outcomes.

the results indicate that family ownership has a positive and statistically significant effect on post-M&A performance in both indonesia and Malaysia, with coefficients of 0.0384 (p < 0.05) and 0.0455 (p < 0.05), respectively. this suggests that greater family involvement in ownership structure is associated with improved performance outcomes following M&A transactions in these two countries. By contrast, the coefficient for singapore is 0.00108 and statistically insignificant, indicating that family ownership does not enhance post-M&A performance in that context. the detailed results of these analyses can be seen in table 8.

to interpret these cross-country differences, it is important to consider the broader institutional and ideological context. Family firms should not be seen as naturally occurring entities, but rather as institu- tional outcomes shaped by the prevailing ideologies and political systems of each country. For example, countries with socially conservative ideologies, often characterized by multi-party political systems, tend to be more permissive toward the growth of family ownership and influence in corporate structures. such ideologies frequently foster close ties between family-owned firms and the government, which may translate into preferential treatment compared with other ownership types.

conversely, countries with more liberal ideologies—commonly associated with developed economies that emphasize stronger corporate governance—tend to discourage concentrated family influence within companies. this approach seeks to reduce the risk of majority shareholders, particularly families,

Table 7. the effect of family ownership on post-M&a performance, with and without considering the impact of the CoViD-19 pandemic.

Variables (1)

2000-2019 (2)

Pre-Pandemic CoViD-19 2000-2016

ownership structure FF (%) 0.0400*** 0.0501** 0.0278**

(0.0111) (0.0219) (0.0134) M&a characteristics DealValue −0.00105 −0.00828** 0.00232

(0.00198) (0.00393) (0.00233) exp 0.00429 0.0135 0.00741

(0.00767) (0.0153) (0.00828) industryDummy −0.00519 −0.0298** −0.00991*

(0.00689) (0.0138) (0.00760) Firm characteristics Firmage 0.00124*** 0.00159*** 0.000518*

(0.000293) (0.000585) (0.000325) FCF 0.0542* 0.149*** 0.0898***

(0.0419) (0.0336) (0.0184) Capex 0.249*** 0.310** 0.184**

(0.0880) (0.147) (0.0815) assetstangibility −0.0238* −0.0620** −0.0396**

(0.0156) (0.0310) (0.0181) Country characteristics Corrupt −0.000475 0.000854 −0.00498*

(0.00323) (0.00651) (0.00376) gDPgrowth 0.000241 0.00226 0.000960

(0.00119) (0.00334) (0.00196) Constant −0.0279*** −0.0572** −0.0448*

(0.0111) (0.0257) (0.0679) Prob > F 0.000 0.000 0.000 industry Fixed-effect no no Yes Year-Fixed effect no no Yes observations 1,032 846 846 R-squared 0.039 0.055 0.130

Notes: table 7 reports the regression results on the impact of family ownership on post-M&a performance. Column (1) presents the results using the full observation period, without adjusting for the potential effects of the CoViD-19 pandemic. in contrast, Column (2) reports the regression results based on a shortened observation window, accounting for potential distortions in firm performance arising from the CoViD-19 pandemic. other control variables are defined in table 2. statistical significance is denoted by asterisks: ***, **, and * indicate sig- nificance at the 1%, 5%, and 10% levels, respectively.

16 A. r. FAhlevi et Al.

expropriating the rights of minority shareholders. At the same time, it promotes a more equitable and competitive business environment that fosters broad-based corporate growth, rather than favoring a par- ticular ownership structure.

4.2.6.  Domestic vs. CBM&A table 9 reports the regression results examining the relationship between family ownership and post-M&A performance, distinguishing between domestic M&A and cross-border M&A (cBM&A) transactions. Model (1) indicates that family ownership (FF) has a positive and statistically significant impact on post-M&A performance in domestic M&A transactions, with a coefficient of 0.0736 (p < 0.01). this suggests that greater family involvement enhances firm performance following domestic acquisitions. Model (2) pro- vides consistent evidence for cBM&A transactions, showing that family ownership is again positively and significantly associated with post-M&A performance, with a coefficient of 0.0754 (p < 0.01). however, this specification does not account for country-specific characteristics, which may play a critical role in shap- ing the outcomes of cross-border deals.

Model (3), which incorporates country-level characteristics, presents a contrasting result. here, the coefficient of family ownership turns negative and statistically insignificant (−0.0467), indicating that once cross-country institutional differences are considered, family ownership does not enhance post-cBM&A performance. instead, the findings suggest that the complexities and risks inherent in cBM&A—such as cultural integration challenges, institutional distance, and governance conflicts—can offset the potential advantages of family control.

taken together, the results imply that while family control improves post-M&A performance in domes- tic markets by facilitating coordination, leveraging relational networks, and mitigating agency conflicts, its benefits diminish in cross-border contexts. in cBM&A, the heightened risks of cultural misalignment, institutional divergence, and governance frictions undermine the effectiveness of family ownership.

Table 8. Post-M&a performance in indonesia, Malaysia, and singapore. Variables indonesia (1) Malaysia (2) singapore (3)

ownership structure FF (%) 0.0384** 0.0455** 0.00108

(0.0189) (0.0182) (0.0317) Control variables included included included Constant 0.0438* −0.0802*** −0.913**

(0.0325) (0.0180) (0.378) Prob > F 0.000 0.000 0.000 industry Fixed-effect Yes Yes Yes Year-Fixed effect Yes Yes Yes observations 242 483 303 R-squared 0.145 0.085 0.155

Notes: table 8 reports the regression results on the impact of M&a implementation in indonesia, Malaysia, and singapore, which constitute the focus of this study. the definitions of the control variables are provided in table 2. statistical significance is indicated by asterisks, where ***, **, and * denote the 1%, 5%, and 10% significance levels, respectively.

Table 9. Post-domestic and cross-border M&a performance.

VaRiaBLes

(1) FF and Post-Domestic M&a

Performance

(2) FF and Post-Cross-Border M&a

Performance

(3) FF and Post-Cross-Border M&a

Performance

FF (%) 0.0736*** 0.0754*** −0.0467 (0.0206) (0.0205) (0.0377)

Constant −0.166** −0.144* −0.173** (0.0960) (0.0925) (0.0867)

Country characteristics Yes no Yes industry fixed-effect Yes Yes Yes Year-fixed effect Yes Yes Yes observations 646 646 205 R-squared 0.176 0.171 0.416

Notes: Model (1) represents domestic M&a without incorporating country-specific characteristics, such as corruption levels and gDP. Model (2) includes domestic M&a with country characteristics. Model (3) refers to cross-border M&a (CBM&a) with country characteristics. the depen- dent variable in Models (1), (2), and (3) is Perform, which measures the firm’s performance following the M&a. other control variables are defined in table 2. statistical significance is denoted by asterisks: ***, **, and * indicate significance at the 1%, 5%, and 10% levels, respectively.

cogent Business & MAnAgeMent 17

overall, these findings underscore that the role of family ownership in driving post-M&A success is highly context-dependent: it is advantageous in domestic settings but less effective in the more complex envi- ronment of cross-border transactions.

5.  Conclusion

this study set out to investigate how family ownership and accounting conservatism jointly influence post-merger and acquisition (M&A) performance in emerging market contexts, with a particular focus on southeast Asia. By integrating ownership structure and financial reporting practices, this research aims to uncover the mechanisms through which firm-level governance features shape strategic outcomes in environments characterized by institutional uncertainty and enforcement gaps.

our findings reveal that family-controlled firms exhibit stronger post-M&A performance compared to their non-family counterparts. this performance advantage is further strengthened when such firms adopt conservative accounting practices, which promote financial discipline, reduce the likelihood of overvaluation, and enhance investor trust. together, these governance and reporting mechanisms enable more prudent decision-making and risk management, particularly in high-uncertainty strategic contexts like M&A.

this study contributes to the theoretical development of agency theory and socioemotional wealth (seW) theory by contextualizing and extending their applications in the domain of M&A within emerging market environments. While prior studies have predominantly examined family firm behaviour in mature economies, our findings demonstrate that in institutional settings with weaker enforcement mecha- nisms—such as southeast Asia—family ownership interacts with accounting conservatism to create a distinctive governance configuration that reduces both type i and type ii agency risks. this extends classical agency theory by illustrating that ownership concentration alone is insufficient to explain firm behaviour; rather, its effects are contingent on the presence of financial reporting mechanisms that dis- cipline managerial and family incentives.

Moreover, while seW theory suggests that family firms may prioritize noneconomic goals at the expense of value creation, our results nuance this view by showing that conservative accounting can align socioemotional considerations with strategic prudence in high-risk decisions such as M&A. in doing so, the study does not merely confirm existing propositions but integrates reporting conservatism as a novel and underexplored moderating mechanism, thereby offering a more refined understanding of how family firms balance risk, control, and performance in transitional institutional environments. this theo- retical extension is particularly relevant for understanding firm behaviour in settings where formal gov- ernance structures are underdeveloped, highlighting the role of accounting practices as functional substitutes for institutional oversight.

the practical implications of this study are significant for various stakeholders. For regulators and policymakers, the findings underscore the importance of fostering institutional environments that pro- mote high-quality financial reporting and protect minority shareholder interests, particularly in family-dominated corporate structures. creating robust frameworks for transparency and governance is essential for enhancing investor confidence and ensuring fair market practices.

For practitioners and investors, this research highlights the critical need to assess both ownership structures and accounting practices when evaluating the strategic potential of M&A. understanding how family ownership and accounting conservatism influence M&A outcomes can guide more informed decision-making, particularly in regions with less stringent regulatory environments. this insight can help identify firms that are likely to achieve better post-M&A performance and avoid the risks associated with poorly governed transactions.

Despite its contributions, this study acknowledges several limitations. it does not account for the influ- ence of political cycles, such as national elections, which may affect both the timing and outcomes of M&A transactions in developing economies. Furthermore, the analysis does not explicitly control for firms’ adoption of international Financial reporting standards (iFrs), a key element of the institutional environ- ment that could influence the application and measurement of accounting conservatism. Future research

18 A. r. FAhlevi et Al.

could incorporate these political and institutional factors to provide a more nuanced understanding of the factors influencing M&A outcomes in transitional contexts.

Acknowledgments

the authors would like to thank the senior editor and the anonymous reviewers for their insightful and constructive comments throughout the review process.

Authors’ contributions

credit: Ali Riza Fahlevi: conceptualization, Data curation, Formal analysis, investigation, Methodology, project administration, resources, software, Writing – original draft; Budi Frensidy: conceptualization, Formal analysis, supervision, Writing – review & editing; Ancella Anitawati Hermawan: conceptualization, Formal analysis, supervision, validation; Aria Farah Mita: conceptualization, Formal analysis, supervision, validation.

Disclosure statement

the authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

the authors received no direct funding for this research.

About the authors

Ali Riza Fahlevi is a lecturer in the Department of Accounting at the Faculty of economics and Business, telkom university, Bandung, indonesia, and a Doctoral candidate in the Department of Accounting at the Faculty of economics and Business, universitas indonesia, Depok, indonesia. With extensive experience as a professional busi- ness consultant, he specializes in investment and corporate restructuring, with a particular focus on mergers and acquisitions (M&A). his research interests include investment, M&A, international finance, corporate governance, and financial accounting. Ali Riza Fahlevi is the corresponding author. e-mail: [email protected]; [email protected]

Budi Frensidy is a professor of Accounting at the Department of Accounting, Faculty of economics and Business, universitas indonesia, Depok, indonesia. his research interests are the capital market, corporate governance, and corporate finance.

Ancella Anitawati Hermawan is an Associate professor of Accounting at the Department of Accounting, Faculty of economics and Business, universitas indonesia, Depok, indonesia. her research interests and expertise are perfor- mance management and control systems, corporate governance, sustainability management, internal control, and risk management.

Aria Farah Mita is an Associate professor of Accounting at the Department of Accounting, Faculty of economics and Business, universitas indonesia, Depok, indonesia. her research interests and publications focus on financial account- ing, accounting standard setting, corporate governance, and auditing.

ORCID

Ali riza Fahlevi http://orcid.org/0000-0002-3320-3379 Budi Frensidy http://orcid.org/0000-0002-4287-2144 Ancella Anitawati hermawan http://orcid.org/0000-0003-2026-8920 Aria Farah Mita http://orcid.org/0000-0001-5888-1339

Data availability statement

the data that support the findings of this study are available from the corresponding author [Ali riza Fahlevi] upon reasonable request.

cogent Business & MAnAgeMent 19

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