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The role of state ownership on acquisition premia: Do Chinese enterprises pay systematically higher acquisition premia?

Jäsche, Stefanie LU (2017) EKHR81 20171
Department of Economic History
Abstract
Usually, high acquisition premia are considered to be a proxy for aggressive management style, extremely risk-taking behavior and poor managerial decision making and ultimately failure. In the case of China, it is questionable if this assumption can hold true. In general, cross border M&A failure rate is high and did not vary significantly over time. A study by KPMG found that only 17% of cross-border acquisitions created shareholder value, while 53% of acquisitions destroyed shareholder value or just broke even (KPMG, 2013; Shimizu et al., 2004) How comes that, if profits and appropriate acquisition premia, crucial for success, are extremely hard to generate, still so many Chinese investors acquire European targets? Employing a dataset of... (More)
Usually, high acquisition premia are considered to be a proxy for aggressive management style, extremely risk-taking behavior and poor managerial decision making and ultimately failure. In the case of China, it is questionable if this assumption can hold true. In general, cross border M&A failure rate is high and did not vary significantly over time. A study by KPMG found that only 17% of cross-border acquisitions created shareholder value, while 53% of acquisitions destroyed shareholder value or just broke even (KPMG, 2013; Shimizu et al., 2004) How comes that, if profits and appropriate acquisition premia, crucial for success, are extremely hard to generate, still so many Chinese investors acquire European targets? Employing a dataset of 531 Chinese outward cross-border M&As over the period of 1996 to 2017, roughly half of it is conducted by SOE. This paper finds that, on average Chinese MNEs pay higher acquisition premia than other Non-Chinese investors do for similar targets. The question that arises out of these findings is why Chinese investors are willing to pay more than their peers? (Less)
Please use this url to cite or link to this publication:
author
Jäsche, Stefanie LU
supervisor
organization
course
EKHR81 20171
year
type
H1 - Master's Degree (One Year)
subject
keywords
Key words: Mergers, Acquisitions, Acquisition Premium, China, SOE
language
English
id
8928695
date added to LUP
2017-11-30 08:04:07
date last changed
2017-11-30 08:04:07
@misc{8928695,
  abstract     = {{Usually, high acquisition premia are considered to be a proxy for aggressive management style, extremely risk-taking behavior and poor managerial decision making and ultimately failure. In the case of China, it is questionable if this assumption can hold true. In general, cross border M&A failure rate is high and did not vary significantly over time. A study by KPMG found that only 17% of cross-border acquisitions created shareholder value, while 53% of acquisitions destroyed shareholder value or just broke even (KPMG, 2013; Shimizu et al., 2004) How comes that, if profits and appropriate acquisition premia, crucial for success, are extremely hard to generate, still so many Chinese investors acquire European targets? Employing a dataset of 531 Chinese outward cross-border M&As over the period of 1996 to 2017, roughly half of it is conducted by SOE. This paper finds that, on average Chinese MNEs pay higher acquisition premia than other Non-Chinese investors do for similar targets. The question that arises out of these findings is why Chinese investors are willing to pay more than their peers?}},
  author       = {{Jäsche, Stefanie}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The role of state ownership on acquisition premia: Do Chinese enterprises pay systematically higher acquisition premia?}},
  year         = {{2017}},
}