The impact of state ownership, formal institutions and resource seeking on acquirers’ returns of Chinese M&A

Min Du (), Agyenim Boateng () and David Newton ()
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Min Du: Leeds Beckett University
Agyenim Boateng: Glasgow Caledonian University
David Newton: University of Nottingham

Review of Quantitative Finance and Accounting, 2016, vol. 47, issue 1, No 7, 159-178

Abstract: Abstract We examine the effects of state ownership, institutions and resource-seeking behavior on post-acquisition stock price returns of Chinese cross-border mergers and acquisitions over the period 1998–2008. Chinese acquiring firms experience negative returns ranging from 2.92 to 10.80 % in 12- and 60-month post-event periods, respectively. State ownership (SOE), interaction between R&D and SOE, formal institutional distance and acquirer size have a positive and significant impact on the long-term acquirer returns. However, the interaction between tangible resources and SOE and acquirer cash holdings appears to have a negative and significant impact on long-term returns. Overall, our results suggest that the state and institutions constitute important sources of long-term value creation for Chinese acquirers.

Keywords: Long-term returns; State ownership; Institutions; Mergers & acquisitions (search for similar items in EconPapers)
JEL-codes: G34 G38 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (18)

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DOI: 10.1007/s11156-015-0498-0

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