The Short-term Performance And Determinants On Chinese And Indian Cross-border M&As

During the recent decade, the world has witnessed the rapid growth of cross-border M&As from emerging economies, among which China and India have been the most active players. Cross-border M&As has been the main way for Chinese firms and India firms to realize internationalization, to increase international competitiveness. However, can cross-border M&As really increase the performance of Chinese and Indian acquirers? Which factor is influencing their performance? These questions have raised great attentions in the extant literatures. This study, by applying event study and multivariate regression method, is to evaluate value creation from these cross-border M&As from two representative emerging countries, namely China and India, and trying to find the determining factors that result in the different performances of these international acquisition activities.The dissertation begins with the literature review section that provides a brief summary of the relevant literature and important theoretical articles. Then, motives of cross-border M&As in emerging economies are summarized as:the seeking of strategic assets, the seeking of new markets to avoid trade barriers, the fast way to be internationalized and the support from government. Also, the similar aspects and different features of characteristics of cross-border M&As from these two emerging economies are compared and analyzed to develop the hypotheses tested in this study. After collecting the data about cross-border M&As from these two countries, I conduct the empirical research to compare the short-term performance and to find the influencing factors. Finally, based on the results from empirical study, I put forward some suggestions to increase the performance of M&A by two countries’acquirers, like to establish the sound regulations and laws, to promote the optimization and upgrading of industrial structure, to enhance market supervision system and information disclosure system and to train international management talents.The main part of this dissertation is the empirical study on short-term performances and influencing factors of Chinese and Indian cross-border M&As. Applying event method to79Chinese cross-border M&A deals and310Indian deals during the period between2000and2010,1found that cross-border M&As conducted by these countries’companies indeed lead to significant positive cumulative abnormal returns and shareholder wealth creation, which proves the presence of announcement effect. However, timing and the magnitude of value creation are different between the two countries’deals. Chinese firms tend to provide higher and earlier abnormal returns to investors even before the news are officially announced. In contrast, Indian acquirers obtain the abnormal return only at the official announcement day. In addition, due to the difficulty in data collection, I used a sample size of63Chinese deals and203Indian deals for multivariate regression analysis. According to the empirical results, Indian shareholders are more likely to benefit from deals taken in developed markets and English speaking countries, while Chinese investors gain favorable returns from the cross-border expansions in manufacturing industry and developed economies. Therefore, location and official language of the targets greatly affects short-term performance of Indian companies’cross-border M&As, while targets’locations and industries for Chinese companies’deals.