Do Chinese M&A activities create shareholder value in the short run? Evidence from Chinese-German cross-border takeovers
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Jing Wang, Michel Charifzadeh 
, Tim Alexander Herberger
This work is licensed under a Creative Commons Attribution 4.0 International License.
Abstract
Our paper investigates the response of acquiring firms’ stock returns around the announcement date in cross-border mergers and acquisitions (M&A) between listed Chinese acquirers and German targets. We apply an event study methodology to examine the shareholder value effect based on a sample of M&A deals over the most recent period of 2012-2018. We apply a market model event study based on the argumentation of Brown and Warner (1985) and use short-term observation periods according to Andrade, Mitchell, and Stafford (2001) as well as Hackbarth and Morellec (2008). The results indicate that the announcement of M&A involving German targets results in a positive cumulative abnormal return of on average 2.18% for Chinese acquirers’ shareholders in a five-day symmetric event window. Furthermore, we found slight indications of possible information leakage prior to the formal announcement. Although it shows that the size of acquiring firms is not necessarily correlated with the positive abnormal returns in the short run, this study suggests that Chinese acquirers’ shareholders gain higher abnormal returns when the German targets are non-listed companies.
Keywords: Investment Banking, Merger & Acquisition, Cross-Border Takeovers, Value Creation
Authors’ individual contribution: Conceptualization – J.W. and M.C.; Methodology – J.W. and M.C.; Writing – J.W., M.C., and T.A.H.; Investigation – J.W., M.C., and T.A.H.; Resources – J.W.; Supervision – M.C. and T.A.H.
Declaration of conflicting interests: The Authors declare that there is no conflict of interest.
Acknowledgements: This research project is financially supported by the Andrássy University as well as the ESB Business School.
JEL Classification: G20, G34, G38
Received: 20.08.2020
Accepted: 03.11.2020
Published online: 06.11.2020
How to cite this paper: Wang, J., Charifzadeh, M., & Herberger, T. A. (2020). Do Chinese M&A activities create shareholder value in the short run? Evidence from Chinese-German cross-border takeovers. Corporate Law & Governance Review, 2(2), 33-46. https://doi.org/10.22495/clgrv2i2p3
