 Can government industrial policy enhance corporate bidding? The evidence of ChinaYenn-Ru Chen, Xiaoquan Jiang and Chia-Hsiang Weng Pacific-Basin Finance Journal, 2020, vol. 60, issue C Abstract: We adopt the policy of “Opinion on Corporate Mergers and Acquisitions” (OCMA) issued by the State Council of China in 2010 as an exogenous experiment to examine the corporate bidding decisions and the post-merger performance. While the policy encourages more corporate bidding decisions, the policy-driven mergers are not appreciated by the market investors at the time of announcements. The policy-driven M&As, on average, do not increase firm performance unless those acquirers possess a high pre-merger value of internal financial sufficiency or market power. The additional analysis shows that the insignificant positive effect of the policy-driven M&As is because the value created by the non-SOE acquirers is offset by the value decreased by the SOE acquirers. The value creation in non-SOE acquirers remains consistent at different levels of financial strength and market power. Differently, policy-driven M&As decrease (increase) value for SOE acquirers with a medial and low (high) pre-merger level of financial strength or market power. Keywords: Industrial policy; Mergers and acquisitions; Merger synergies; State-owned enterprises (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:60:y:2020:i:c:s0927538x19307127 DOI: 10.1016/j.pacfin.2020.101288 Access Statistics for this article Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee More articles in Pacific-Basin Finance Journal from Elsevier |
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