Performance and Characteristics of Acquiring Firms in the Chinese Stock Markets

39 Pages Posted: 13 Feb 2009

See all articles by Jing Chi

Jing Chi

Massey University - School of Economics and Finance

Qian Sun

Fudan University

Martin R. Young

Massey University - School of Economics and Finance

Multiple version iconThere are 2 versions of this paper

Date Written: February 12, 2009

Abstract

We investigate the performance and characteristics of acquiring firms on 1148 M&A on the two Chinese stock markets from 1998 to 2003. Using the market model, the CAPM model and the buy-and-hold methods, we find significantly positive abnormal returns before (6 months) and upon M&A announcements, while the long-run abnormal returns (6 months) after M&A are insignificant. Within our sample, cash is the dominant payment method and the competition during M&A is low. The cross-sectional analysis on acquirers' market performance upon announcements shows that the political advantages of acquiring firms have a significantly positive impact on the acquirers' performance, while the economic advantages do not. Cross-provincial M&A and better corporate governance create value to acquiring firms. Finally, cash payment impacts positively and regulation development impacts negatively the performance of acquiring firms during M&A.

Keywords: M&A, acquiring firms, China

JEL Classification: G34

Suggested Citation

Chi, Jing and Sun, Qian and Young, Martin R., Performance and Characteristics of Acquiring Firms in the Chinese Stock Markets (February 12, 2009). Available at SSRN: https://ssrn.com/abstract=1341919 or http://dx.doi.org/10.2139/ssrn.1341919

Jing Chi (Contact Author)

Massey University - School of Economics and Finance ( email )

Private Bag 11-222
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+64 6 3569099 Ext. 84048 (Phone)
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Qian Sun

Fudan University ( email )

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Shanghai, 200433
China
86 21 25011094 (Phone)

Martin R. Young

Massey University - School of Economics and Finance ( email )

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Palmerston North, 4442
New Zealand

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