An Empirical Analysis of Merger and Acquisition Performance of Listed Companies in China

Activities of mergers and acquisitions (M&A) have been expanded quite rapidly recently in Chinese equity markets as well as in global economy for the last several decades. Firm can be endogenously developed by increasing investments to improve the production power, or through M&A to enlarge the size in a short period of time. This paper investigates the performances of the target and acquiring firms listed in the major stock markets from the M&A activities by employing the event study and examining the abnormal rate of returns around the announcement date of M&A. During the period of this study, M&A’s have been improving the target firms’ economic returns while there have been weak evidence for the performance of the acquiring firms. The changes of systematic risk levels of the acquiring firms after M&A’s are also investigated