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

Du, Min; Boateng, Agyenim; Newton, David


Agyenim Boateng

David Newton


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
Keywords Long-term returns, State ownership, Institutions, Mergers & acquisitions
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