The impact of state ownership, formal institutions and resource seeking on acquirers’ returns of Chinese M&A
This study investigates the long-term acquirer returns of Chinese cross-border mergers and acquisitions (CBM&A) over the period of 1998-2008. Using Buy and Hold and Calendar Time methods, we find that Chinese acquiring firms experience negative returns ranging from 2.92% to 10.80% in 12-month and 60-month post-event periods respectively. Regarding the factors influencing returns, state ownership (SOE), interaction between R&D and SOE, formal institutional distance, acquirer size have positive and significant impact on the long-term acquirer returns. However, interaction between tangible resources and SOE and acquirer cash holding appear to have negative and significant impact on long-term returns. Overall, our results suggest that the role of government through SOEs is an important source of value creation for CBM&A in Chinese emerging economy.
The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.
Citation : Boateng, A., Newton, D., Du, M. (2015)The impact of state ownership, formal institutions and resource seeking on acquirers’ returns of Chinese M&A. Review of Quantitative Finance & Accounting, 47(1), pp.159-178
ISSN : 0924-865X
Research Institute : Finance and Banking Research Group (FiBRe)
Peer Reviewed : Yes