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Cross-Border Acquisitions Targeting Chinese Firms – An Empirical Study of Acquirer Returns

Sjöström, Maurits LU and Sinclair, Magnus LU (2012) FEKN90 20121
Department of Business Administration
Abstract
The main purpose of this study is to investigate if U.S. firms´acquisition of Chinese firms and U.K. firms are value-enhancing for the U.S. acquirer. The secondary purpose is to investigate if the targets´ level of intangible assets has an impact on the return. We find that there exists a historical acquirer return, amounting to 314 basis points for U.S. firms acquiring Chinese targets and 136 basis points for U.S firms acquiring U.K. targets. These findings are both stated on a five percent statistical significance level. When evaluating the impact of intangible assets, we find no statistical significance. However, the negative relationship with Chinese targets, containing substantial intangible assets, point towards some value... (More)
The main purpose of this study is to investigate if U.S. firms´acquisition of Chinese firms and U.K. firms are value-enhancing for the U.S. acquirer. The secondary purpose is to investigate if the targets´ level of intangible assets has an impact on the return. We find that there exists a historical acquirer return, amounting to 314 basis points for U.S. firms acquiring Chinese targets and 136 basis points for U.S firms acquiring U.K. targets. These findings are both stated on a five percent statistical significance level. When evaluating the impact of intangible assets, we find no statistical significance. However, the negative relationship with Chinese targets, containing substantial intangible assets, point towards some value destruction. This could indicate that transparency and political risk have a bigger impact on these firms. (Less)
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author
Sjöström, Maurits LU and Sinclair, Magnus LU
supervisor
organization
course
FEKN90 20121
year
type
H1 - Master's Degree (One Year)
subject
keywords
Cross-Border M&A, China, Intangible Assets, Event study and Cumulative Abnormal Returns (CAR)
language
English
id
2542607
date added to LUP
2012-07-02 12:30:32
date last changed
2012-07-02 12:30:32
@misc{2542607,
  abstract     = {The main purpose of this study is to investigate if U.S. firms´acquisition of Chinese firms and U.K. firms are value-enhancing for the U.S. acquirer. The secondary purpose is to investigate if the targets´ level of intangible assets has an impact on the return. We find that there exists a historical acquirer return, amounting to 314 basis points for U.S. firms acquiring Chinese targets and 136 basis points for U.S firms acquiring U.K. targets. These findings are both stated on a five percent statistical significance level. When evaluating the impact of intangible assets, we find no statistical significance. However, the negative relationship with Chinese targets, containing substantial intangible assets, point towards some value destruction. This could indicate that transparency and political risk have a bigger impact on these firms.},
  author       = {Sjöström, Maurits and Sinclair, Magnus},
  keyword      = {Cross-Border M&A,China,Intangible Assets,Event study and Cumulative Abnormal Returns (CAR)},
  language     = {eng},
  note         = {Student Paper},
  title        = {Cross-Border Acquisitions Targeting Chinese Firms – An Empirical Study of Acquirer Returns},
  year         = {2012},
}