TY - JOUR
T1 - Wealth impact of cross-border US acquisitions of Chinese firms
AU - Kiymaz, Halil
AU - Alon, Ilan
PY - 2011/6
Y1 - 2011/6
N2 - 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.
AB - 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.
KW - Acquirer's sales growth rate
KW - Cross-border
KW - Event study
KW - Financial manufacturing and service sectors
KW - International mergers and acquisitions
KW - M&Amp;A
KW - USA
KW - Wealth creation
UR - http://www.scopus.com/inward/record.url?scp=79959743176&partnerID=8YFLogxK
U2 - 10.1504/EJIM.2011.040914
DO - 10.1504/EJIM.2011.040914
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AN - SCOPUS:79959743176
SN - 1751-6757
VL - 5
SP - 432
EP - 451
JO - European Journal of International Management
JF - European Journal of International Management
IS - 4
ER -