Three essays on cross-border mergers and acquisitions

Abstract

This thesis mainly focuses on three essays on cross-border M&As. A sample of Chinese outward mergers and acquisitions (M&As) between 1997 and 2011 involving Chinese listed firms as the acquirers is analysed in the first essay to highlight the relationship between political connections, financial constraints, and stock returns. On average, Chinese firms, especially private firms, are more likely to face financial constraints. However, the political connections can release these kinds of financial constraints. Less financially constrained firms have higher stock returns when there is an announcement of outward M&As. The second essay investigates whether foreign acquisitions can mitigate financial constraints, improve Chinese target firms’ research and development (R&D), and productivity, based on a sample of 914 inward M&As deals over the period of 1994-2011. Empirical results show that foreign acquisitions in China are associated with a reduction in target firms’ financial constraints, which is pronounced for non-state owned enterprises. I also provide evidence that foreign acquisitions can improve target firms’ R&D investment and productivity post acquisition. The third essay investigates the impact of strategic assets with firm heterogeneity on location-takeover choices by Chinese multinational enterprises by employing a dataset of 978 outward M&A cases over the time period 2000-2014. There is positive correlation between strategic assets and location-takeover choices. Technology is the most important factor in comparison to brands and management practices. Firms with a higher degree of R&D expense are sensitive to host country’s strategic assets. Government-involved firms care more about ‘hard’ technology (e.g. advanced innovation of product, plant, or equipment) than ‘soft’ technology (e.g. management quality).

Date of Award	1 Jul 2017
Original language	English
Awarding Institution	Univerisity of Nottingham
Supervisor	Xiuping Hua (Supervisor) & Weimin Liu (Supervisor)