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Download fileDo cross-border mergers and acquisitions increase short-term market performance? The case of Chinese firms
journal contribution
posted on 2016-09-08, 08:42 authored by Fang Tao, Xiaohui Liu, Lan Gao, Enjun XiaDespite the new momentum in cross-border mergers and acquisitions (M&As) by emerging market
firms,
we have a limited understanding of the impact of these activities. Drawing on signalling theory and the
institution-based view, this paper examines the extent of stock market reactions to the announcement of
cross-border M&A deals, based on an event study of a sample of Chinese
firms during the period 2000–
2012. The
findings indicate that the announcement of cross-border M&As results in a positive stock
market reaction; this effect is more significant in the mainland Chinese stock markets (Shanghai and
Shenzhen) than that in the Hong Kong market. The shareholders of Chinese
firms that acquire a target
firm in a host country with a low level of political risk gain higher cumulative abnormal returns than
those
firms targeting companies in countries with a high level of political risk. The shareholders of
Chinese state-owned enterprises experience lower abnormal returns compared with those of Chinese
privately owned
firms when engaging in cross-border M&A deals.
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