Do European Acquisitions in China Outperform?

30 Pages Posted: 6 Mar 2007

See all articles by Helene Wiegerinck

Helene Wiegerinck

Royal DSM

J. Henk von Eije

University of Groningen - Faculty of Economics and Business

Date Written: March 1, 2007

Abstract

We examine bidder returns for European acquisitions in China. In particular we study whether the bidder returns in the Chinese emerging economy are larger than those in the United States. For both target countries no significant cumulative abnormal bidder returns are found and we do not find significant differences between acquisitions in China and in the USA, except for a significant lower standard deviation of bidder returns in China. Regression analysis confirms that acquisitions in China do not outperform those in the USA. Univariate tests indicate that acquisitions in China perform worse if the target is a private company or when the acquirer comes from the European continent, but this result is not confirmed with regression analysis. These results suggest that Chinese targets are normal targets in the world of cross-border acquisitions. The only relative benefit of acquisitions in China is that it is significantly less likely to result in fierce negative reactions of investors.

Keywords: Cross-border acquisitions, bidder returns, event study

JEL Classification: G14, G34

Suggested Citation

Wiegerinck, Helene and von Eije, J. Henk, Do European Acquisitions in China Outperform? (March 1, 2007). Available at SSRN: https://ssrn.com/abstract=967705 or http://dx.doi.org/10.2139/ssrn.967705

Helene Wiegerinck

Royal DSM ( email )

Het Overloon 1
6411 TE Heerlen
Netherlands

J. Henk Von Eije (Contact Author)

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

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