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Impact of Chinese cross-border outbound M&As on firm performance: Econometric analysis using firm-level data

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Listed:
  • Edamura, Kazuma
  • Haneda, Sho
  • Inui, Tomohiko
  • Tan, Xiaofei
  • Todo, Yasuyuki

Abstract

Chinese cross-border outbound mergers and acquisitions (M&As) have been expanding rapidly since the mid-2000s with target firms in developed countries. The primary motives for such M&As are expansion into new markets and sourcing of knowledge and strategic assets. This study is the first attempt to examine the effects of Chinese outbound M&As on firm performance by applying propensity score matching estimations to a large set of firm-level data. We find that the sales, productivity, and tangible as well as intangible assets of the acquiring firms increase substantially after M&A transactions, which suggest that Chinese firms on average achieve their intended goals of outbound M&As. Further, outbound M&As do not increase research and development (R&D) intensity, implying complementarity, rather than overlapping, between R&D activities of the acquiring and acquired firms.

Suggested Citation

  • Edamura, Kazuma & Haneda, Sho & Inui, Tomohiko & Tan, Xiaofei & Todo, Yasuyuki, 2014. "Impact of Chinese cross-border outbound M&As on firm performance: Econometric analysis using firm-level data," China Economic Review, Elsevier, vol. 30(C), pages 169-179.
  • Handle: RePEc:eee:chieco:v:30:y:2014:i:c:p:169-179
    DOI: 10.1016/j.chieco.2014.06.011
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    References listed on IDEAS

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    Cited by:

    1. Schubert, Torben & Jäger, Angela & Türkeli, Serdar & Visentin, Fabiana, 2020. "Addressing the productivity paradox with big data: A literature review and adaptation of the CDM econometric model," MERIT Working Papers 2020-050, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Li, Jian & Strange, Roger & Ning, Lutao & Sutherland, Dylan, 2016. "Outward foreign direct investment and domestic innovation performance: Evidence from China," International Business Review, Elsevier, vol. 25(5), pages 1010-1019.
    3. Valeria, Gattai & Rajssa, Mechelli & Piergiovanna, Natale, 2016. "FDI and Heterogeneous Firms: Evidence from BRIC Countries," Working Papers 322, University of Milano-Bicocca, Department of Economics, revised 18 Jan 2016.
    4. Howell, Anthony & Lin, Jia & Worack, Stephan, 2020. "Going out to innovate more at home: Impacts of outward direct investments on Chinese firms' domestic innovation performance," China Economic Review, Elsevier, vol. 60(C).
    5. Huang, Youxing & Zhang, Yan, 2017. "How does outward foreign direct investment enhance firm productivity? A heterogeneous empirical analysis from Chinese manufacturing," China Economic Review, Elsevier, vol. 44(C), pages 1-15.

    More about this item

    Keywords

    Cross-border outbound M&As; China; Knowledge; Strategic assets; Expansion to new markets;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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