Comments received throughout development of this work are gratefully acknowledged. Special thanks go to John Doukas, an anonymous referee, as well as participants at the 2011 EFMA Asian Financial Management Symposium for valuable comments and suggestions.
Gains to Chinese Bidder Firms: Domestic vs. Foreign Acquisitions
Article first published online: 30 SEP 2013
© 2013 John Wiley & Sons Ltd
European Financial Management
Volume 21, Issue 5, pages 905–935, November 2015
How to Cite
Black, E. L., Doukas, A. J., Xing, X. and Guo, J. (2015), Gains to Chinese Bidder Firms: Domestic vs. Foreign Acquisitions. European Financial Management, 21: 905–935. doi: 10.1111/j.1468-036X.2013.12031.x
- Issue published online: 22 NOV 2015
- Article first published online: 30 SEP 2013
- mergers and acquisitions;
- financial performance;
- foreign direct investment;
This paper examines whether foreign acquisition of Chinese firms improves share price performance relative to domestic acquisitions. The results show that foreign acquisitions are not associated with positive abnormal returns in the short-run, but that they are so associated for domestic acquisitions. Foreign acquisitions also realise significant long-run gains, especially when the acquiring firm is large. Specifically, we find that there is a significant, positive long-run outperformance of 29.81% for large foreign acquisitions benchmarked against domestic ones, while large foreign acquisitions earn 22.39% in aggregate. Our evidence suggests that large Chinese acquirers gain when they expand their operations abroad, consistent with the literature on reverse internalisation.