The purpose of this paper is tantamount to study whether mergers and acquisitions (M&A) improve the financial performance of Chinese listed companies. We use panel data regression to examine 434 completed M&A activities from 2012 to 2016 initiated by Chinese companies listed on the Shanghai and Shenzhen Stock Exchanges. The evidence indicates that, on average, the firm performed better after the M&A activities. We further divide all sample enterprises into three different types of M&A. The results demonstrate that when other conditions are unchanged, horizontal M&A and conglomerate M&A are positively related to firm performance. Our results suggest that the firm can benefit from horizontal M&A through economies of scale in operations while financial synergies following the conglomerate M&A enhance the firm performance. The findings deepen our understanding of the consequences of M&A and provide evidence that it is an important corporate growth strategy for the Chinese capital market.

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