Cross‐border M&As and the performance of Chinese acquiring firms

Wenli Sun and Dan Xie

The World Economy, 2022, vol. 45, issue 5, 1614-1647

Abstract: This paper investigates the performance of Chinese acquirers in cross‐border mergers and acquisitions (M&As) between 2010 and 2018. Compared to domestic acquirers, the paper finds no significant improvement in labour productivity nor total factor productivity (TFP) within two years after acquisitions. However, firms engaged in foreign acquisitions witness an increase in total sales, employ more labour and accumulate more capital up to two years after transactions. The effects are more pronounced in deals in developed destinations relative to less‐developed countries. Heterogeneous effects are explored across various industries, as well as deal structures. The results imply that outward cross‐border M&As in China are not driven by productivity improvement but rather scale effects.

Date: 2022
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