Testing Operating Performance of Chinese Listed Firms before and after Cross-border M＆As: The Role of Entrepreneurial Orientation

摘要

At a time when China encourages its firms to go overseas, especially to countries and regions involved in its "Belt and Road Initiative", and sets up a favorable domestic environment for innovation and entrepreneurship, this paper is a first trial looking along both the two dimensions to test whether Chinese firms’ operating performance changes after cross-border merger and acquisition（CBM＆A） activities, using entrepreneurial orientation（EO） as a moderating factor. The paper combines data from Chinese listed firms’ annual reports, Chinese stock market financial statements database and the Zephyr database from 2001 to 2015 to examine how acquirers’ operating performance changes after CBM＆A activities using EO as a moderating factor. In order to test whether the results are affected by the stock market, this paper also defines abnormal return on equity（ROE） to detect abnormal operating performance. After these, the paper divides the sample into separate industry groups to see whether results will change. The results obtained for the whole sample show that the performance of Chinese listed firms is fluctuant after CBM＆As within the sample years. It increases one year after the acquisition but drops two years later and then follows an increasing trend again. The moderating factor of EO is not significant for the sample as a whole. However, after dividing the sample into separate industry groups, it becomes clear that different industries have their own characteristics. EO helps Chinese listed firms to adjust to the post-acquisition situation and even to improve their performance to some extent in the metal mining industry and the business services industry. When ROE is substituted with abnormal ROE, the results do not change much.