An Analysis of Short-Term Performance of UK Cross-Border Mergers and Acquisitions by Chinese Listed Companies

31 Pages Posted: 3 Nov 2016  

Lin Zhu

City University London - Sir John Cass Business School

Scott Moeller

City, University of London - Cass Business School - Faculty of Finance

Date Written: November 2, 2016

Abstract

Using a unique and proprietary database of Chinese cross-border mergers and acquisitions into the UK from 2012 to early 2016, this paper investigates the short-term performance of UK cross-border mergers and acquisitions acquired by Chinese publicly-listed companies. Using event study analysis with four different time-period windows, the results show that Chinese acquirers have earned significantly positive abnormal returns on the first day following the announcement date of M&A deals, however, these positive returns faded away over time. In addition, we conduct the event analysis by sector subsamples. The findings suggest that Chinese acquirers in Real Estate and other business sector deals have gained positive abnormal returns, while those in the Financial sector had negative abnormal returns. Regarding the factors that drive stock performance, the paper takes five of the most related deal characteristics into consideration both in univariate analysis and regression analysis. The results indicate that target form (public/private) and absolute transaction size are the most influential factors on the short-term performance of these Chinese acquiring firms: acquirers engaged in deals where the target firms are UK private and small/medium-sized earn statistically significant higher abnormal returns than those UK public and large-sized targets.

Keywords: cross-border, mergers and acquisitions, abnormal return, cumulative abnormal return, China, UK

Suggested Citation

Zhu, Lin and Moeller, Scott, An Analysis of Short-Term Performance of UK Cross-Border Mergers and Acquisitions by Chinese Listed Companies (November 2, 2016). Available at SSRN: https://ssrn.com/abstract=2863247 or http://dx.doi.org/10.2139/ssrn.2863247

Lin Zhu

City University London - Sir John Cass Business School

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Scott Moeller (Contact Author)

City, University of London - Cass Business School - Faculty of Finance ( email )

106 Bunhill Row
London, EC1Y 8TZ
Great Britain
+44 20 7040 8706 (Phone)
+44 20 7040 5168 (Fax)

HOME PAGE: http://www.cass.city.ac.uk/experts/S.Moeller

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