The effect of government involvement and payment method on merger and acquisition performance: The case of China

Nnadi, Matthias, Volokitina, Evgeniia and Aghanya, Daniel (2020) The effect of government involvement and payment method on merger and acquisition performance: The case of China. International Journal of Banking, Accounting and Finance, 11 (3). pp. 385-410. ISSN 17553830

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Abstract

This paper applies a sample of 842 to investigate the effect of government involvement and payment methods on merger and acquisition of Chinese listed firms for the period 1993–2015. The study employs market model as benchmark to estimate expected returns for several event windows. We find that Chinese acquirer shareholders experience higher returns from the acquisitions in firms with no government involvements than those where government is involved. Our study demonstrates that stock-financed acquisitions maximise the wealth gains of shareholders than cash-backed acquisitions. Our finding further shows that using cash to finance government backed acquisitions yields extra wealth for investors on the announcement date whilst the market experience higher abnormal returns when stocks are used to finance the acquisition of privately held targets. The result of this paper has significant policy implications for both M&A financing decisions and government involvements in merger deals.

Item Type:	Article
Additional Information:	Copyright © 2020 Inderscience Enterprises Ltd.
Uncontrolled Keywords:	Acquisition; China; Chinese; Government; Mergers; Performance; Returns
Subjects:	H Social Sciences > HG Finance J Political Science > JQ Political institutions Asia H Social Sciences > HG Finance > Investment
Divisions:	School of Computing > Staff Research and Publications
Depositing User:	Tamara Malone
Date Deposited:	05 Dec 2023 12:11
Last Modified:	05 Dec 2023 12:11
URI:	https://norma.ncirl.ie/id/eprint/6875

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