Cross-Border Acquisitions Targeting Chinese Firms – An Empirical Study of Acquirer Returns

University essay from Lunds universitet/Företagsekonomiska institutionen

Abstract: The main purpose of this study is to investigate if U.S. firms´acquisition of Chinese firms and U.K. firms are value-enhancing for the U.S. acquirer. The secondary purpose is to investigate if the targets´ level of intangible assets has an impact on the return. We find that there exists a historical acquirer return, amounting to 314 basis points for U.S. firms acquiring Chinese targets and 136 basis points for U.S firms acquiring U.K. targets. These findings are both stated on a five percent statistical significance level. When evaluating the impact of intangible assets, we find no statistical significance. However, the negative relationship with Chinese targets, containing substantial intangible assets, point towards some value destruction. This could indicate that transparency and political risk have a bigger impact on these firms.

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