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Do acquirers' gain? evidence from the Chinese and UK consumer product and services market

Zhao, Y., Kanungo, R. and Karbhari, Yusuf 2015. Do acquirers' gain? evidence from the Chinese and UK consumer product and services market. Investment Management and Financial Innovations 12 (3) , pp. 64-72.

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Abstract

China has rapidly transformed itself using dynamic reforms through economic transition and regulatory provisions. Consequently, certain firms have undertaken mergers and acquisitions (M&A) to achieve higher market capitalization. However, the extent to which such reforms have affected the Chinese consumer product and services sector largely remains unexplored, particularly compared to a more seasoned market, such as the UK. This study examines a panel of recent M&A events in the consumer product and services market of both China and the UK and evaluates the eventinduced wealth gain to the acquirers. The results suggest that the UK acquirers exhibit a relatively higher return continuation than do their Chinese counterparts. In addition, in contrast to the UK market, the post-event returns for the Chinese market are significantly negative, except for the announcement date. The findings demonstrate that the Chinese consumer market does not respond to M&A announcements to the same extent as does the UK market. Finally, the shareholders wealth gain, as one of the prime motives of M&A, is not duly achieved for the Chinese acquirers, despite the wider reform of the Chinese market.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Last Modified: 21 Mar 2019 15:57
URI: http://orca.cf.ac.uk/id/eprint/111677

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