Performance and Characteristics of Acquiring Firms in the Chinese Stock Markets

Jing Chi, Qian Sun, Martin R. Young
2009 Social Science Research Network  
We investigate the performance and characteristics of acquiring firms on 1148 M&A on the two Chinese stock markets from 1998 to 2003. Using the market model, the CAPM model and the buy-and-hold methods, we find significantly positive abnormal returns before (6 months) and upon M&A announcements, while the long-run abnormal returns (6 months) after M&A are insignificant. Within our sample, cash is the dominant payment method and the competition during M&A is low. The cross-sectional analysis on
more » ... tional analysis on acquirers' market performance upon announcements shows that the political advantages of acquiring firms have a significantly positive impact on the acquirers' performance, while the economic advantages do not. Cross-provincial M&A and better corporate governance create value to acquiring firms. Finally, cash payment impacts positively and regulation development impacts negatively the performance of acquiring firms during M&A. JEL Classification: G34
doi:10.2139/ssrn.1341919 fatcat:ccxzfdamr5bcvmufqjnkl3gr3y