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

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

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.

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  • Li, Ying & Han, Yue & Fok, Robert C.W., 2020. "Do cross-border mergers and acquisitions affect acquirers’ trade credit? Evidence from an emerging market," International Review of Economics & Finance, Elsevier, vol. 70(C), pages 423-439.
    • Handle: RePEc:eee:reveco:v:70:y:2020:i:c:p:423-439
    DOI: 10.1016/j.iref.2020.06.041
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