Purpose: The purpose of this paper is to analyse the short-term wealth effects of mergers and acquisitions (M&As) in Malaysia. In addition, this study also examines the factors that affect the short-term shareholders' wealth during M&A announcements in Malaysia. Design/methodology/approach: The short-term wealth effect is measured by the Cumulative Average Abnormal Returns (CAARs). For the purpose of this study, the wealth effects of a sample of 180 target and 196 bidding companies announced in Malaysia during the period from 2001 to 2009 are analyzed. Findings: Results of the study revealed that there are positive market reactions by both target and bidding shareholders towards M&A announcements. However, target shareholders earned significantly higher CAARs than bidding shareholders. There is sufficient evidence to suggest that economic condition surrounding merger announcements, type of acquisition (diversified/related), premium paid and status of bid (successful/failed) affect the short-term wealth effects of target and bidding shareholders during M&A announcements. However, the impact on the target and bidding shareholders are different. Relative size negatively affects bidding shareholders' wealth. Target with higher ROE also earned significantly higher returns. Originality/value: There is high number of announced M&A deals in Malaysia, little is known about the determinants of short-term wealth effects of M&As in emerging market Malaysia, in particular the third M&A wave.