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How Do Chinese Firms Perform Before and After Cross-Border Mergers and Acquisitions?

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  • HaiYue Liu
  • YiXian Li
  • Rui Yang
  • XiaoPing Li

Abstract

To evaluate the financial performance of Chinese cross-border mergers and acquisitions (M&As), this research examined 86 cross-border M&As from 2007 to 2012, which included the 5 years before and the 5 years after the merger dates. Eighty-one domestic M&As were also chosen as the control group to compare the performances of cross-border and domestic M&As. The difference in difference (DID) results revealed that, in general, the cross-border M&As did not improve the firms’ financial performances and that the domestic M&As performed better. The feasible generalized least squares (FGLS) regression results indicated that the CNY exchange rate appreciation, infrastructure，labor costs, formal institutional distances, and technological levels in the host countries are significantly related to post-merger performances over the long run, and firms that acquired resource-oriented foreign firms had better long-term financial performances; however, state-owned firms were more likely to have worse profitability after the cross-border M&As, and host countries located in “One Belt One Road” (OBOR) regions showed poorer post-merger performances. The study results could be of valuable assistance to Chinese firms considering future cross-border M&As.

Suggested Citation

  • HaiYue Liu & YiXian Li & Rui Yang & XiaoPing Li, 2021. "How Do Chinese Firms Perform Before and After Cross-Border Mergers and Acquisitions?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(2), pages 348-364, January.
    • Handle: RePEc:mes:emfitr:v:57:y:2021:i:2:p:348-364
    DOI: 10.1080/1540496X.2018.1556636
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    Cited by:

    1. Genc, Omer F. & Luo, Dan, 2024. "A different view on acquisition paradox: Empirical examination of international acquisitions from competitiveness perspective," Journal of Economics and Business, Elsevier, vol. 130(C).
    2. Ouyang, Shanshan & Li, Yanxi & Wu, Haowen & Zhao, Heng & Xu, Runxiang, 2023. "Structure and evolution of the greenfield FDI network along the belt and road," Research in International Business and Finance, Elsevier, vol. 64(C).
    3. Wang, Hui & Si, Ieongcheng & Chen, Zhihua, 2024. "Does the Belt and Road Initiative promote China and the countries along the route to reconstruct the global value chain? Evidence from value-added trade," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 63-83.
    4. Simon RAFAQAT & Sahil RAFAQAT & Saoul RAFAQAT & Dawood RAFAQAT, 2021. "Impact of Merger and Acquisition on the Profitability of Medium Sized Technology Companies Listed on New York Stock Exchange," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 12(2), pages 124-139, December.
    5. Liu, Dandan & Zhu, Ying & Xie, Xinxin, 2024. "The tangible hand? Does Communist Party involvement in governance promote corporate M&A performance," Finance Research Letters, Elsevier, vol. 61(C).

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