Do cross-border mergers and acquisitions increase short-term market performance? The case of Chinese firms
Research output: Contribution to journal › Article › peer-review
Authors
Colleges, School and Institutes
External organisations
- Loughborough University
- Beijing Institute of Technology
Abstract
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.
Details
Original language | English |
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Pages (from-to) | 189-202 |
Number of pages | 14 |
Journal | International Business Review |
Volume | 26 |
Issue number | 1 |
Early online date | 21 Jul 2016 |
Publication status | Published - 1 Feb 2017 |
Keywords
- Chinese firms, cross-border mergers and acquisitions, stock market reactions, political risk, ownership