Do cross-border mergers and acquisitions affect acquirers’ trade credit? Evidence from an emerging market

Ying Li, Yue Han and Robert C.W. Fok

International Review of Economics & Finance, 2020, vol. 70, issue C, 423-439

Abstract: We examine the impact of cross-border mergers and acquisitions (CBM&As) vis-à-vis domestic M&As on a firm’s trade-credit level using a sample of Chinese firms from 2003 to 2015. Our findings suggest that CBM&A acquirers experience positive announcement returns, which are consistent with the extant literature on the market reaction of CBM&As. However, CBM&A acquirers, on average, have a lower amount of trade credit post-CBM&As; the decrease in trade credit is larger in comparison to domestic M&As. The findings are robust to the alternative measure of trade credit and remain intact after accounting for endogeneity. Further analysis suggests that CBM&A acquirers incur higher risk post-CBM&As, and our findings support the risk-exposure hypothesis.

Keywords: Cross-border M&As; Trade credit; Operating risk; Credit risk (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:70:y:2020:i:c:p:423-439

DOI: 10.1016/j.iref.2020.06.041

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