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Performance and characteristics of acquiring firms in the Chinese stock markets

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  • Chi, Jing
  • Sun, Qian
  • Young, Martin

Abstract

We investigate acquiring firms of 1148 M&A in the two Chinese stock markets. Using the market model, the CAPM model and the buy-and-hold method, we find significantly positive abnormal returns before (6Â months) and upon M&A announcements, while the long-run abnormal returns (6Â months) after M&A are insignificant. Cash is the dominant payment method and the competition during M&A is low. The cross-sectional analysis shows that the political advantages of acquiring firms have a significantly positive impact on the acquirers' performance, while the economic advantages do not. Finally, cross-provincial M&A and better corporate governance create value to acquiring firms.

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Bibliographic Info

Article provided by Elsevier in its journal Emerging Markets Review.

Volume (Year): 12 (2011)
Issue (Month): 2 (June)
Pages: 152-170

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Handle: RePEc:eee:ememar:v:12:y:2011:i:2:p:152-170

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Web page: http://www.elsevier.com/locate/inca/620356

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Keywords: M& A Acquiring firms China;

References

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Citations

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Cited by:
  1. Lulu Gu & W. Robert Reed, 2011. "Chinese Overseas M&A Performance and the Go Global Policy," Working Papers in Economics 11/37, University of Canterbury, Department of Economics and Finance.
  2. von Eije, Henk & Wiegerinck, Hélène, 2010. "Shareholders' reactions to announcements of acquisitions of private firms: Do target and bidder markets make a difference?," International Business Review, Elsevier, vol. 19(4), pages 360-377, August.
  3. Enrico Geretto & Rubens Pauluzzo, 2012. "Stock Exchange Markets in China: Structure and Main Problems," Transition Studies Review, Springer, vol. 19(1), pages 89-106, September.

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