Abstract
Do US firms gain value by buying Chinese firms? This study investigates the wealth impact of mergers and acquisitions' announcements on US firms involved in cross-border acquisitions of 204 Chinese firms from 1999 to 2007. The empirical findings show that US firms experienced statistically significant wealth gains on the announcement day, though they are primarily concentrated in transactions involving divested targets. An analysis of wealth gains with respect to industry affiliation indicates that acquisitions in the Chinese manufacturing and services sectors experience the greatest wealth gains. In contrast, acquisitions in the financial sector result in a loss of wealth. Among the factors influencing wealth gains were the undervaluation of the yuan, favourable Chinese economic conditions, positive sales growth rates and financial slack of the acquiring firms.
Original language | English |
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Pages (from-to) | 432-451 |
Number of pages | 20 |
Journal | European Journal of International Management |
Volume | 5 |
Issue number | 4 |
DOIs | |
State | Published - Jun 2011 |
Externally published | Yes |
Keywords
- Acquirer's sales growth rate
- Cross-border
- Event study
- Financial manufacturing and service sectors
- International mergers and acquisitions
- M&Amp;A
- USA
- Wealth creation