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    Chinese overseas M&A performance and the go global policy (2010)

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    Type of Content
    Discussion / Working Papers
    UC Permalink
    http://hdl.handle.net/10092/5400
    
    Publisher
    College of Business and Economics
    University of Canterbury. Department of Economics and Finance
    Collections
    • Business: Working Papers [193]
    • Working Papers in Economics [142]
    Authors
    Gu, L.
    Reed, W.R.
    show all
    Abstract

    This paper investigates whether stock markets view Chinese M&As as increasing shareholder wealth. The subject is of interest given the influential role that the government plays in Chinese firms' overseas activities, and the fact that the government may have objectives other than maximization of shareholder wealth. We examine 145 OMAs by Chinese acquiring firms over the year 1994-2008. We find some evidence that markets positively responded to news of Chinese OMAs. However, we also find that markets responded less favorably after China implemented its Go Global policy encouraging overseas investment. We hypothesize two reasons for this: First, the expansion of OMAs under Go Global resulted in Chinese firms pursuing less attractive targets, on average. Second, Go Global re-directed investment towards industries having national strategic value but diminished profit value. Using a Blinder-Oaxaca decomposition procedure, we find no evidence to support this latter hypothesis. Thus, to whatever extent strategic interests may motivate China's Go Global policy, it does not appear that their pursuit has come at the expense of shareholder wealth.

    Citation
    Gu, L., Reed, W.R. (2010) Chinese overseas M&A performance and the go global policy. Department of Economics and Finance. 51pp..
    This citation is automatically generated and may be unreliable. Use as a guide only.
    Keywords
    Economic Development; China Economy; Overseas Mergers and Acquisitions; Event Study; Go Global
    ANZSRC Fields of Research
    14 - Economics::1402 - Applied Economics::140202 - Economic Development and Growth
    38 - Economics::3801 - Applied economics::380107 - Financial economics
    15 - Commerce, Management, Tourism and Services::1502 - Banking, Finance and Investment
    Rights
    https://hdl.handle.net/10092/17651

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