Impact analysis of mergers and acquisitions on the performance of China's new energy industries

The development of new energy industries is crucial to a nation's energy transition to carbon neutrality, while photovoltaic, wind power, lithium battery, and new energy vehicles industries have been active in the capital markets. We choose mergers and acquisitions (M&A) activities in such industries in China to investigate how they affect firms' short-run market performance and long-run innovation. Using data gathered from 2012 to 2020, we evaluate the degree of stock price volatility with the Carhart four-factor model combined with event study analysis. Changes in innovation after M&A activity has occurred are evaluated using the PSM-DID model. Empirical analysis shows that M&A could have a positive, short-run impact on stock prices of new energy industries, while the impact of technology M&A on sub-industries is not consistent. The cumulative average abnormal returns (CAAR) of the wind power and photovoltaic industries turn from negative to positive, and the correlative new energy vehicles and lithium battery industries reach the highest returns in a window period with similar trend lines. Furthermore, technology M&A positively affects the innovation performance of new energy firms, and this effect lasts three to four years. In contrast to prior industry-wide and conclusion-inconsistent M&A studies, we concentrate on new energy industries and prove the definite positive effect of technology M&A for the firms.