Differences in returns to cross-border M&A in the short and long run: Evidence from Chinese listed firms

Using the cross-border mergers and acquisitions (M&A) events of Chinese listed firms between 2009 and 2018, this paper studies the impact of cross-border M&A on the short -and long-term performance of firms through the event study method and the propensity score matching-difference-in-differences regression method. The results indicate that in the short run, Chinese firm cross-border M&A acquire significant, positive cumulative abnormal returns (CARs) within a 21-day event window. In the long run, cross-border M&A fail to improve firm returns on assets (ROA). Furthermore, the paper uncovers that the impact of M&A on ROA varies with the characteristics of acquirers and host countries, and the impact on CAR varies with the characteristics of deals and are not sensitive to characteristics of acquirers or host countries. The paper identifies the differing impacts of China's "going out" strategy on firm performance in the short and long run and provides explanations for a deeper understanding of the cross-border M&A of Chinese listed firms. (c) 2021 Published by Elsevier Inc.