The Effects Of Cross-border Acquisitions On Shareholders' Value—the Case From China

Cross-border acquisitions,as one of the important ways for enterprises to invest overseas,could help Chinese firms to expand foreign markets,acquire valuable resources and advanced technology,and thus improve the competitive advantages of Chinese enterprises.Based on the previous studies and combined with several theories,this paper determined whether cross-border mergers and acquisitions of Chinese listed firms have generated wealth effects for shareholders.Furthermore,this study examined the impacts of institutional settings of security market as well as the innovation capability of host countries on such wealth effects.This study selects 472 cross-border acquisition events of Chinese listed firms over the period from 2010 to 2015.The research results indicate that around the announcement day of an acquisition event,the wealth for shareholders has increased significantly.Over the window period[-1,1],the cumulative abnormal returns rate is 1.04%.In addition,this study also found that the stock market environment as well as the innovation capability of host country have a significant impact on the wealth effect of shareholders.In the well-established stock market,such as Hong Kong Stock Market,the wealth effect of cross-border acquisitions will weaken or even insignificantly.Apart from that,when Chinese firms carry out cross-border acquisitions in well-developed countries,they could obtain even higher cumulative abnormal returns.Hence,our research conclusions provide enlightening suggestions for managerial practice and individual investors.