Mergers and Acquisitions in China in the 21st Century: A Comparison Study Between Strategically Acquired and Financial-Sponsored Investments
Date
2011
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Producer
Director
Performer
Choreographer
Costume Designer
Music
Videographer
Lighting Designer
Set Designer
Crew Member
Funder
Rehearsal Director
Concert Coordinator
Advisor
Moderator
Panelist
Alternative Title
Department
Haverford College. Department of Economics
Type
Thesis
Original Format
Running Time
File Format
Place of Publication
Date Span
Copyright Date
Award
Language
eng
Note
Table of Contents
Terms of Use
Rights Holder
Access Restrictions
Open Access
Terms of Use
Tripod URL
Identifier
Abstract
This study compares the differences in the market perceptions and the actual performances of strategically acquired firms and of financial-sponsored firms in China from 2006 to 2009. Two main hypotheses here are: 1) A merger & acquisition (M&A) activity creates value for acquired firms, regardless of the types of investors; 2) Strategically acquired firms create less value over the same time period compared to the financial investor-backed firms due to the differences in the acquirers’ motivations. In order to prove these hypotheses, standard event studies that look at the cumulative abnormal returns of the acquired firms over periods of [-20, 20] and [-120, 80] are used. Our results confirm that mergers & acquisitions do create market values for the acquired firms. Our results also show that while in the short term the market perceives M&A activities involving strategic investors to be slightly better, this difference diminished after the 07-08 financial crisis. In the long run, the financially sponsored firms have gradually performed better than the strategically acquired firms, especially after 2007.