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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)
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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},
  keyword      = {Key words: Mergers,Acquisitions,Acquisition Premium,China,SOE},
  language     = {eng},
  note         = {Student Paper},
  title        = {The role of state ownership on acquisition premia: Do Chinese enterprises pay systematically higher acquisition premia?},
  year         = {2017},
}