Chinese Companies Cross-Border Mergers and Acquisitions Performance: Evidence from Inward and Outward Deals

Abstract

This dissertation focuses on the Chinese cross-border M&As (mergers and acquisitions) market of public companies’ performance. The study precisely identifies short-term performance surrounding a M&A announcement that a public Chinese company is acquiring an overseas firm or is being targeted. The key words of these three chapters are method of payment, public status, and acquirer industry.

This study measures short-term performance by investigating CARs (cumulative average abnormal returns). The windows are approximately 2 days and 5 days before and after a M&A announcement. The time span is 15 years (2002–2016) for Chinese public companies’ cross-border transactions and 23 years (1994-2016) for transactions targeting Chinese public companies. The first chapter demonstrates that cash transactions outperform stock transactions although more public Chinese companies chose stock to finance transactions. The second chapter demonstrates that an acquired public overseas target underperforms compared with targeting private companies. In addition, the transaction volume indicates that most bidder companies made the right decision. The third chapter demonstrates that overseas financial institutions are more likely (over 60% of transactions) to acquire Chinese public companies in all industries. These investors do bring abnormal returns to their target companies.