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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.

Suggested Citation

  • Chi, Jing & Sun, Qian & Young, Martin, 2011. "Performance and characteristics of acquiring firms in the Chinese stock markets," Emerging Markets Review, Elsevier, vol. 12(2), pages 152-170, June.
  • Handle: RePEc:eee:ememar:v:12:y:2011:i:2:p:152-170
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    References listed on IDEAS

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    Cited by:

    1. Lulu Gu & W.R. Reed, 2013. "Chinese overseas M&A performance and the Go Global policy," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 21(1), pages 157-192, January.
    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. Zhu, PengCheng & Jog, Vijay & Otchere, Isaac, 2014. "Idiosyncratic volatility and mergers and acquisitions in emerging markets," Emerging Markets Review, Elsevier, vol. 19(C), pages 18-48.
    4. Reddy, K. Srinivasa & Nangia, Vinay Kumar & Agrawal, Rajat, 2012. "Corporate mergers and financial performance: A new assessment of Indian cases," MPRA Paper 60425, University Library of Munich, Germany, revised 2013.
    5. Lebedev, Sergey & Peng, Mike W. & Xie, En & Stevens, Charles E., 2015. "Mergers and acquisitions in and out of emerging economies," Journal of World Business, Elsevier, vol. 50(4), pages 651-662.
    6. Bhabra, Harjeet S. & Huang, Jiayin, 2013. "An empirical investigation of mergers and acquisitions by Chinese listed companies, 1997–2007," Journal of Multinational Financial Management, Elsevier, vol. 23(3), pages 186-207.
    7. Hong Zhu & Qi Zhu, 2016. "Mergers and acquisitions by Chinese firms: A review and comparison with other mergers and acquisitions research in the leading journals," Asia Pacific Journal of Management, Springer, vol. 33(4), pages 1107-1149, December.
    8. Yanga, Shuying & Kim, Seongcheol, 2017. "Do Cross-border M&As by Chinese Media and Entertainment Firms Create Value? Evidence from US-targeted and Korea-targeted Deals," 14th ITS Asia-Pacific Regional Conference, Kyoto 2017: Mapping ICT into Transformation for the Next Information Society 168549, International Telecommunications Society (ITS).
    9. Ebru Reis, 2015. "The Determinants of Acquirer Returns in the Turkish Stock Market," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 29(2), pages 21-39.
    10. Enrico Geretto & Rubens Pauluzzo, 2012. "Stock Exchange Markets in China: Structure and Main Problems," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 19(1), pages 89-106, September.

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    Keywords

    M& A Acquiring firms China;

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