Chinese Overseas M&A Performance and the Go Global Policy
It is well-known that government plays an important role in the business activities of Chinese firms. Less certain is the effect this influence has on the wealth of those firms’ shareholders. We contribute to the literature by analyzing stock market reactions to announcements by Chinese firms of overseas mergers and acquisitions (OMAs). OMAs are of particular interest because there can exist a conflict between the interests of the public sector in acquiring overseas assets, and the interests of the private sector in maximizing shareholder wealth. Our main data set consists of 213 observations of 157 OMA events that occurred between 1994-2009, using share market returns from the Shanghai, Shenzhen, Hong Kong, and U.S. markets. The aggregation of share price data across multiple markets, and the listing of firms in multiple exchanges, raise econometric issues for the standard event-study methodology. To address these, we use a new, feasible generalized least squares (GLS) procedure developed by Gu (2011). Based upon an analysis using both aggregated and disaggregated samples, and of daily and cumulative abnormal returns, we find consistent evidence that (i) Chinese OMAs have not lowered the wealth of shareholders of Chinese acquiring firms, and (ii) shareholders of Chinese acquiring firms have not fared worse under Go Global than before Go Global.
|Date of creation:||09 Apr 2011|
|Contact details of provider:|| Postal: Private Bag 4800, Christchurch, New Zealand|
Phone: 64 3 369 3123 (Administrator)
Fax: 64 3 364 2635
Web page: http://www.econ.canterbury.ac.nz
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
- Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 411-432, September.
- Gunasekarage, Abeyratna & Hess, Kurt & Hu, Amity (Jie), 2007. "The influence of the degree of state ownership and the ownership concentration on the performance of listed Chinese companies," Research in International Business and Finance, Elsevier, vol. 21(3), pages 379-395, September.
- Martin Hovey & Larry Li & Tony Naughton, 2003. "The Relationship Between Valuation and Ownership of Listed Firms in China," Corporate Governance: An International Review, Wiley Blackwell, vol. 11(2), pages 112-122, 04.
- Pehr-Johan Norbäck & Lars Persson, 2008.
"Cross-Border Mergers & Acquisitions Policy in Service Markets,"
Journal of Industry, Competition and Trade,
Springer, vol. 8(3), pages 269-293, December.
- Norbäck, Pehr-Johan & Persson, Lars, 2008. "Cross-Border Mergers & Acquisitions Policy in Service Markets," Working Paper Series 743, Research Institute of Industrial Economics.
- Boubakri, Narjess & Dionne, Georges & Triki, Thouraya, 2008. "Consolidation and value creation in the insurance industry: The role of governance," Journal of Banking & Finance, Elsevier, vol. 32(1), pages 56-68, January.
- Narjess Boubakri & Georges Dionne & Thouraya Triki, 2006. "Consolidation and Value Creation in the Insurance Industry: the Role of Governance," Cahiers de recherche 0626, CIRPEE.
- Qi, Daqing & Wu, Woody & Zhang, Hua, 2000. "Shareholding structure and corporate performance of partially privatized firms: Evidence from listed Chinese companies," Pacific-Basin Finance Journal, Elsevier, vol. 8(5), pages 587-610, October.
- 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.
- Agata Antkiewicz & John Whalley, 2007. "Recent Chinese Buyout Activity and the Implications for Wider Global Investment Rules," Canadian Public Policy, University of Toronto Press, vol. 33(2), pages 207-226, June. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:cbt:econwp:11/37. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Albert Yee)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.