The impact of State Ownership, Formal Institutions and Resource Seeking on Acquirers' Return of Chinese M&A

Date

2015-02-04

Advisors

Journal Title

Journal ISSN

ISSN

1573-7179

Volume Title

Publisher

Springer

Type

Article

Peer reviewed

Yes

Abstract

We examine the effects of state ownership, institutions and resource-seeking behavior on post-acquisition stock price returns of Chinese cross-border mergers and acquisitions over the period 1998–2008. Chinese acquiring firms experience negative returns ranging from 2.92 to 10.80 % in 12- and 60-month post-event periods, respectively. State ownership (SOE), interaction between R&D and SOE, formal institutional distance and acquirer size have a positive and significant impact on the long-term acquirer returns. However, the interaction between tangible resources and SOE and acquirer cash holdings appears to have a negative and significant impact on long-term returns. Overall, our results suggest that the state and institutions constitute important sources of long-term value creation for Chinese acquirers.

Description

Keywords

Cross-border Mergers and Acquisitions, State Ownership, Formal Institutions, Resource seeking, Chinese firms

Citation

DU, M. and Boateng, A. and Newton, D. (2016). The Impact of State Ownership, Formal Institutions and Resource Seeking on Acquirers' Return of Chinese M&A, Review of Quantitative Finance and Accounting (ABS 3), 47 (1), pp. 159-178

Rights

Research Institute

Finance and Banking Research Group (FiBRe)