Performance After The Mergers And Acquisitions Of Listed Companies In China: To Compare And Cross-industry Mergers And Acquisitions In The Industry

This paper investigates the short term stock return and the long term performance of the acquiring firm around the merger and acquisition of listed firms in China between 2005 and 2007. We conduct an event study to evaluate the short term market response and use a key financial ratio as an indicator of long term operating performance. We examine a sample of 222 to see if the post merger performance is improved. The result of event study indicates that there is positive but not significant cumulative abnormal return for the acquiring firm in the window period around the acquisition announcement. And the long term operating performance is improving in 3 years after the acquisition is completed compared with the performance 3 years before the acquisition. We also examine the relationship between the changes of post merger performance of the firm and whether the acquisition is inside industry or cross section. The result shows that the improvement of long term operating performance is significantly larger if it is an inside industry acquisition as compared to the cross section cases. But there is no obvious difference in the abnormal return in short term.