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Determinants of Chinese Cross-Border M&As

Nan Hu (), Yun Zhang () and Songtao Tan ()
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Nan Hu: University of Durham, Durham Business School
Yun Zhang: University of Durham, Durham Business School
Songtao Tan: Renmin University of China, School of Finance, China Financial Policy Research Center

Annals of Economics and Finance, 2016, vol. 17, issue 1, 209-233

Abstract: This paper focuses on two of the key determinants of Chinese cross-border M&A performance, industry preference and currency appreciation. Our results show that although resource-related bidders may be motivated to pursue national strategic goals, they do not sacrifice their shareholders' wealth. The substantial RMB appreciation following the exchange rate reform leads to higher bidder abnormal returns in the short-term, with no long-term reversal. We find that the insignificant long-term abnormal returns are mainly due to the enhanced empire building invectives and other agency costs of cash-rich firms in some of the currency-driven acquisitions.

Keywords: Cross-bordermergers and acquisitions; China; Resource-related; Currency appreciation; Shareholder wealth effects (search for similar items in EconPapers)
JEL-codes: G14 G34 (search for similar items in EconPapers)
Date: 2016
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