Document Type
Journal Article
Department/Unit
Department of Management
Title
Cross-border mergers and acquisitions by Chinese listed companies: A principal–principal perspective
Language
English
Abstract
Chinese listed firms have gained the world's attention with several ambitious, high-profile cross-border mergers and acquisitions. In most of these deals, the Chinese government is the largest shareholder of the acquiring firms. As such, it may be the case that the Chinese government pushes through such deals even though they are not in the best interests of minority shareholders, giving rise to principal-principal conflicts. Along these lines, we hypothesize that increased government ownership in the acquiring firm will be associated with investors viewing a cross-border merger deal in less favorable terms. In addition, we hypothesize that environmental complexity will moderate this negative relationship. We test our hypotheses with a sample of cross-border mergers and acquisitions involving Chinese firms from 2000 to 2008. We find support for the main hypothesis, that is, that investors are indeed skeptical of cross-border mergers and acquisitions deals when the government is the majority owner (i. e., principal-principal conflicts). However, we find no support for the moderating effect. We discuss the implications of these findings for researchers and practitioners and suggest future research directions. © 2009 Springer Science+Business Media, LLC.
Keywords
Cross-borders mergers and acquisitions, Event-study methodology, Government ownership, Principal-principal conflicts
Publication Date
2010
Source Publication Title
Asia Pacific Journal of Management
Volume
27
Issue
3
Start Page
523
End Page
539
Publisher
Springer Verlag
DOI
10.1007/s10490-009-9150-7
Link to Publisher's Edition
http://dx.doi.org/10.1007/s10490-009-9150-7
ISSN (print)
02174561
ISSN (electronic)
15729958
APA Citation
Chen, Y., & Young, M. (2010). Cross-border mergers and acquisitions by Chinese listed companies: A principal–principal perspective. Asia Pacific Journal of Management, 27 (3), 523-539. https://doi.org/10.1007/s10490-009-9150-7