A Study of Chinese Overseas Mergers and Acquisitions: 1994-2009

摘要

The effect of government intervention on business is a longstanding topic in political economy. One of the interesting cases is in recent China, where “socialism with Chinese characteristics” is associated with three decades of rapid economic growth. However, many doubt the sustainability of the “dual-track” approach applied in China, which tries to combine “market track” and “planned track” and achieve national goals without sacrificing firm-specific efficiency. This thesis investigates how the “market economy model dominated by political capital” works in Chinese OMAs. We look at Chinese overseas M&As in the period of 1994-2009. It is a good example because 80% of Chinese overseas M&A took place after China’s “Go Global” policy, and approximately half of the executors are state-owned enterprises. We test whether China’s Go Global policy affected shareholders’ wealth while pursuing government’s long-term goals of strategic resource-seeking and industry restructuring. The results show that Chinese OMAs achieved significantly positive performance in the short-run. However, performance decreased and became statistically insignificant over a longer three-year horizon. We find no evidence in the short-run responses of markets that the Go Global policy sacrificed shareholder wealth. However, we find OMAs by state-owned enterprises significantly underperformed private enterprises in the three years following completion of the deal. And there is evidence OMA performance varied across different sectors in the before and after policy periods. We also develop a generalized event study approach that pools multi-listings in event samples and “weights” individual listings by the new information they provide. We think this approach can be applied to other empirical studies in international/emerging markets settings.