An extended event study methodology and its application in the HNA group's overseas market contraction

Xiuzhenzi Wang, Yunjie Wei, Linjun Wang and Shouyang Wang

Journal of Asian Economics, 2024, vol. 94, issue C

Abstract: This paper introduces a novel framework for analyzing the performance of cross-border merger and acquisition (M&A) activities in international business. It investigates whether the contraction of overseas market activities can mitigate financial crises, using the case study of a Chinese multinational enterprise (MNE). Traditional event study methodology, commonly used for assessing business performance changes, relies on assumptions of normality and homoscedasticity in data. However, real financial data often exhibits high volatility and non-normal distribution, rendering traditional methods inadequate for estimation. To address this limitation, we propose an enhanced analytical framework integrating the Shapiro–Wilk test, event studies, quantile regression, and nonparametric rank tests. This approach provides more robust estimates, facilitating a more accurate and comprehensive analysis of business performance changes under specific events. Applying this methodology to assess the short-term performance of HNA Group, a cross-border airline in China, during its financial crisis, we find that while overseas market contraction events generate overall positive short-term value for enterprises, the impact varies depending on the assets sold. However, given HNA Group's substantial debt burden, the positive effect is minimal, indicating that overseas market contraction alone is insufficient as a "self-help" strategy in addressing corporate financial crises.

Keywords: Event study; Quartile regression; HNA group; Overseas market contraction; Financial crisis (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1049007824000782
Full text for ScienceDirect subscribers only

Related works:
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:eee:asieco:v:94:y:2024:i:c:s1049007824000782

DOI: 10.1016/j.asieco.2024.101783

Access Statistics for this article

Journal of Asian Economics is currently edited by C. Wiemer

More articles in Journal of Asian Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().