Chinese Overseas M&A Performance and the go Global Policy

Lulu Gu and W. Reed ()

Working Papers in Economics from University of Canterbury, Department of Economics and Finance

Abstract: This paper investigates whether stock markets view Chinese OMAs as increasing shareholder wealth. The subject is of interest given the influential role that the government plays in Chinese firms’ overseas activities, and the fact that the government may have objectives other than maximization of shareholder wealth. We examine 145 OMAs by Chinese acquiring firms over the year 1994-2008. We find some evidence that markets positively responded to news of Chinese OMAs. However, we also find that markets responded less favorably after China implemented its Go Global policy encouraging overseas investment. We hypothesize two reasons for this: First, the expansion of OMAs under Go Global resulted in Chinese firms pursuing less attractive targets, on average. Second, Go Global re-directed investment towards industries having national strategic value but diminished profit value. Using a Blinder-Oaxaca decomposition procedure, we find no evidence to support this latter hypothesis. Thus, to whatever extent strategic interests may motivate China’s Go Global policy, it does not appear that their pursuit has come at the expense of shareholder wealth.

Keywords: Economic Development; China Economy; Overseas Mergers and Acquisitions; Event Study; Go Global (search for similar items in EconPapers)
JEL-codes: F21 G34 O25 O53 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2010-04-17
New Economics Papers: this item is included in nep-tra
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://repec.canterbury.ac.nz/cbt/econwp/1025.pdf (application/pdf)

Related works:
Journal Article: Chinese overseas M&A performance and the Go Global policy (2013)
Working Paper: Chinese Overseas M&A Performance and the Go Global Policy (2012)
Working Paper: Chinese Overseas M&A Performance and the Go Global Policy (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cbt:econwp:10/25

Access Statistics for this paper

More papers in Working Papers in Economics from University of Canterbury, Department of Economics and Finance Private Bag 4800, Christchurch, New Zealand. Contact information at EDIRC.
Bibliographic data for series maintained by Albert Yee ().