ABSTRACT
To evaluate the financial performance of Chinese cross-border mergers and acquisitions (M&As), this research examined 86 cross-border M&As from 2007 to 2012, which included the 5 years before and the 5 years after the merger dates. Eighty-one domestic M&As were also chosen as the control group to compare the performances of cross-border and domestic M&As. The difference in difference (DID) results revealed that, in general, the cross-border M&As did not improve the firms’ financial performances and that the domestic M&As performed better. The feasible generalized least squares (FGLS) regression results indicated that the CNY exchange rate appreciation, infrastructure,labor costs, formal institutional distances, and technological levels in the host countries are significantly related to post-merger performances over the long run, and firms that acquired resource-oriented foreign firms had better long-term financial performances; however, state-owned firms were more likely to have worse profitability after the cross-border M&As, and host countries located in “One Belt One Road” (OBOR) regions showed poorer post-merger performances. The study results could be of valuable assistance to Chinese firms considering future cross-border M&As.
Notes
1. Fixed telephone subscriptions refer to the sum of active number of analog fixed telephone lines, voice-over-IP (VoIP) subscriptions, fixed wireless local loop (WLL) subscriptions, ISDN voice-channel equivalents, and fixed public payphones.
2. The “Belt and Road” Initiative (BRI) was launched in 2013 as a consensus-based multinational cooperative framework that relies on existing Chinese dual multilateral mechanisms and existing regional cooperative platforms in particular countries. In line with these BRI developments, Chinese firms have been progressively investing in countries along the route. OBOR (One Belt One Road) has become an important destination for China’s foreign direct investment.
3. For length reasons, the test results are not given in this article. The results can be requested from the authors.