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.
- long-term returns
- state ownership
- mergers & acquisitions
Du, M., Boateng, A., & Newton, D. (2016). The impact of state ownership, formal institutions and resource seeking on acquirers’ returns of Chinese M&A. Review of Quantitative Finance and Accounting , 47, 159-178. https://doi.org/10.1007/s11156-015-0498-0