The Impect Of Overseas Expansion On Firm Performance Based On The Secondary Data

With growing increasingly sophisticated Chinese capital market and the international competitiveness of China’s listed companies, the domestic market has been unable to meet the desire for Chinese enterprises to resources and technology. Overseas expansion has become a inevitable process of internationalization of Chinese enterprises,especially overseas expansion of Chinese enterprises is developing rapidly in recently years, however, which ways and means should be adopted by the enterprises, overseas expansion will have a positive or negative impact on the shareholder returns and corporate performance? All of these questions should be solved urgently for the managers. An event study based on the secondary data is conducted to examine the impact of the overseas expansion on enterprises’ short-term performance based on 270 Chinese overseas expansion events happening from 2001 to 2013.In the study of short-term event, this paper based on cumulative abnormal returns(CAR) method to calculate cumulative abnormal returns of the corporate in the short event period(Day-1 and 0) to obtain the empirical analysis, the following conclusions,firstly of all, the announcing of the overseas expansion results in a positive cumulative abnormal returns of 0.56% in event time. Secondly, we also find that after a subdivision of sample, the companies expand to the developed countries acquired significantly positive cumulative abnormal returns of 1.20%, and the companies expand to the underdeveloped countries receive negative cumulative abnormal returns of-0.23%.Thirdly, contrast of the four forms of overseas expansion: cross-border M&A,construction, joint ventures and wholly owned, the companies which carry on the cross-border M&A win the highest significant cumulative abnormal returns of 1.04%.Fourthly, the further research on the cross-border M&A demonstrates that the acquisition of companies in developed countries achieves higher cumulative abnormal returns, reaches 1.41%, more significant impact on firm performance. The article also controls the variables which influence the abnormal returns to do the regression analysis and verifies the results of the empirical analysis. Comparing two regression model of regression analysis finds that company size is the main factor which affects a wholly-owned company, a wholly-owned company achieves negative abnormal returns without considering the size of the company which consistent with the empirical results.In the of long-term event, this paper based on purchase and hold abnormal returns method(BHAR) to obtain long-term abnormal returns, taking into account the overlap of events times which will cause the deviation of result, the number of sample is reduced to 63. The events period spans three years, one year before the announcement date and two years later, influenced by the selected reference companies or the other bias factors exclude events announcements, there is no valuable conclusions. In order to reduce the impact of confounding factors, this article shortens the span of one year of the event periods, that is six months before the announcement date and after. The results show that, in addition to the short announcement period(Day-1 and 0), the sample companies which matched three types of reference companies obtain significant positive abnormal returns in the periods time of six months before the announcement date and after,even in one year event period, The results indicate that the selection of reference companies is effective, the length of the event period is the main factors affecting the long-term abnormal returns.