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Do cross-border mergers and acquisitions increase short-term market performance? The case of Chinese firms

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journal contribution
posted on 08.09.2016, 08:42 by Fang Tao, Xiaohui Liu, Lan Gao, Enjun Xia
Despite 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.

History

School

  • Business and Economics

Department

  • Business

Published in

International Business Review

Volume

26

Issue

1

Pages

189 - 202

Citation

TAO, F. ... et al., 2017. Do cross-border mergers and acquisitions increase short-term market performance? The case of Chinese firms. International Business Review, 26 (1), pp. 189-202.

Publisher

© Elsevier

Version

AM (Accepted Manuscript)

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Acceptance date

29/06/2016

Publication date

2016-07-21

Notes

This paper was published in the journal International Business Review and the definitive published version is available at http://dx.doi.org/10.1016/j.ibusrev.2016.06.006.

ISSN

0969-5931

Language

en