The Determinants of Chinese Cross-border Mergers and Acquisitions Performance

Abstract

This thesis focuses on the determinants of Chinese cross-border mergers and acquisitions (M&As) performance. It provides compelling evidence that country-level factors play significant roles in cross-border M&A outcomes in both deal completion and performance.
The thesis examines whether valuation differences influence the performance of Chinese cross-border M&As. It shows that Chinese acquirers enjoy better stock performance around deal announcement when there are larger differences in stock market returns and exchange rate returns between the home and host countries. Regarding the long-term performance of Chinese cross-border mergers, this study finds that there is a negative relationship between stock market return difference and long-term stock performance, while exchange rate return difference is positively related to long-term performance.
The thesis also investigates the role of international trade in Chinese cross-border M&As. It shows that Chinese acquirers are more likely to complete cross-border mergers when there is a higher level of bilateral trade flow between acquirer and target countries. More bilateral trade also leads to higher abnormal returns to acquirer shareholders in both the short- and long-term. Overall, the results indicate that bilateral trade networks and openness help countries build a strong connection, which assists acquirers in cross-border mergers to overcome barriers and generate synergy gains.