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

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  • Min Du

    (Leeds Beckett University)

  • Agyenim Boateng

    (Glasgow Caledonian University)

  • David Newton

    (University of Nottingham)

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.

Suggested Citation

  • Min Du & Agyenim Boateng & David Newton, 2016. "The impact of state ownership, formal institutions and resource seeking on acquirers’ returns of Chinese M&A," Review of Quantitative Finance and Accounting, Springer, vol. 47(1), pages 159-178, July.
    • Handle: RePEc:kap:rqfnac:v:47:y:2016:i:1:d:10.1007_s11156-015-0498-0
    DOI: 10.1007/s11156-015-0498-0
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    More about this item

    Keywords

    Long-term returns; State ownership; Institutions; Mergers & acquisitions;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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