The impact of state ownership, formal institutions and resource seeking on acquirers’ returns of Chinese M&A

Du, Min; Boateng, Agyenim; Newton, David

Abstract

We examine the effects of state ownership, institutions and resource-seeking behavior on post-acquisition stock price returns of Chinese cross-border mergers and acquisitions over the period 1998–2008. Chinese acquiring firms experience negative returns ranging from 2.92 to 10.80 % in 12- and 60-month post-event periods, respectively. State ownership (SOE), interaction between R&D and SOE, formal institutional distance and acquirer size have a positive and significant impact on the long-term acquirer returns. However, the interaction between tangible resources and SOE and acquirer cash holdings appears to have a negative and significant impact on long-term returns. Overall, our results suggest that the state and institutions constitute important sources of long-term value creation for Chinese acquirers.

• Journal Article Type: Article
• Online Publication Date: Feb 4, 2015
• Publication Date: 2016-07
• Deposit Date: Dec 10, 2021
• Journal: Review of Quantitative Finance and Accounting
• Print ISSN: 0924-865X
• Electronic ISSN: 1573-7179
• Publisher: Springer
• Peer Reviewed: Peer Reviewed
• Volume: 47
• Issue: 1
• Pages: 159-178
• DOI: https://doi.org/10.1007/s11156-015-0498-0
• Keywords: Long-term returns, State ownership, Institutions, Mergers & acquisitions
• Public URL: http://researchrepository.napier.ac.uk/Output/2828613