Assessing abnormal returns: the case of Chinese M&amp;A acquiring firms

Song, Xiaojing; Tippett, Mark; Vivian, Andrew

doi:10.1016/j.ribaf.2017.05.009

Cited by 11 publications

(2 citation statements)

References 24 publications

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“…The study's dependent variable is a short‐term acquisition returns measured by CAR3 (−1, +1) and CAR5 (−2, +2). Abnormal return is estimated using the market model event study after considering a 200 day‐period starting from −241 day and ending −41 day before the announcements as our estimation window (Song, Tippett, & Vivian, 2017; Vij, 2017). Our independent variable is intervention and defines as 1 if a particular month is part of the period surrounding the time when an ownership reform was released or otherwise 0, (see Section 4.1 for details).…”

Section: Research Design and Methods Methodologymentioning

confidence: 99%

Grabbing hand or helping hand? Ownership interventions and acquirers returns; the role of provincial idiosyncrasies

et al. 2020

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Firm's performance is not only influenced by sound decisions but also by institutional processes. This study argues that the effect of government intervention on acquisition returns is partly dependent on institutional factors such as provincial marketization and the legal environment. This study employs ownership and merger and acquisition regulations issued by the Chinese government 2003–2018 to measure government intervention and also employs both the OLS and the random effects technique. The result shows a positive relationship between ownership intervention and acquisition returns. Next, the study finds that variances in regional marketization and the legal environment strengthen this relationship such that acquirers in high marketization regions and acquirers in a robust legal environment earn higher returns than acquirers in a low marketization region and acquirers in a weaker legal environment. The results imply that acquisition returns are not even across all locations in a transitional economy. Ongoing policies should aim at bridging the variances in different locations as it impacts acquirers' returns.

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Section: Research Design and Methods Methodologymentioning

confidence: 99%

Grabbing hand or helping hand? Ownership interventions and acquirers returns; the role of provincial idiosyncrasies

et al. 2020

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“…The application of financial ratios is positively related to the estimated bankruptcy prediction. Applying normative financial ratios by comparing the company's financial ratios with standard companies is used as benchmarks to determine their performance [7]. In connection with the interest in analyzing the company's financial performance, investors must base their framework on two main components in stock analysis, namely price earning ratio and price to book value [8].…”

Section: Introductionmentioning

confidence: 99%

The potential impact of fundamental value, market value, and firm size as moderator variable on firm value at Indonesia palm oil company

Hutauruk¹

2022

World J. Adv. Res. Rev.

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In palm oil entities on the Indonesia Stock Exchange, company size is one of the critical factors in the company's success to generate better company value. This study aims to analyze the effect of fundamental factors and market value on firm value with firm size as a moderating variable in palm oil entities listed on the Indonesia Stock Exchange for 2014 - 2020. The population in this study is oil palm plantation and processing companies. This study used purposive sampling and obtained eight companies with seven years of observation—data analysis using PLS-SEM with an error rate of 5%. Fundamental ratios have a positive but not significant effect on firm value, except market value and firm size have a positive and significant effect on firm value. Fundamental ratios have a positive and significant effect on market value. However, firm size cannot moderate the relationship between market value and firm value. Then the effect of the fundamental ratio on market value is 30.3%, and the rest is influenced by other factors, while the effect of the fundamental ratio and market value on firm value is 85.2%, and other factors influence the rest. Investors should choose issuers with higher ROA and book values. Company size does not strengthen the relationship between book value and the share price of palm oil entities, where the company size is not a factor that determines investor decisions.

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Can digital M&A reduce the stock price crash risk?

Guan,

Wen

2024

Int. J Fin Econ

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With the rapid development of the digital economy, digital mergers and acquisitions (M&A) have become essential means for enterprises to acquire digital technologies and accelerate their digital transformation. This paper examines the impact of digital M&A on stock price crash risk using a sample of M&A transactions of China A‐share listed companies from 2010 to 2021. The results show that digital M&A can reduce stock price crash risk after M&A. Further discussions reveal that compared to non‐digital M&A, digital M&A has a better market effect, and the target firms of digital M&A generally are in different industries from the acquirers, have relatively low registered capital, have a shorter registration time, and have better financial performance. Mechanism tests indicate that during the transaction, digital M&A increases the probability of signing earnout contracts and reduces the cash payment ratio. After the transaction, digital M&A increases research and development (R&D) investment and improves R&D investment efficiency, ultimately reducing stock price crash risk. Cross‐sectional tests suggest that in situations with intense market competition, lower digitalization level of the acquirers, and higher business similarity between the acquirer and the target firm, digital M&A is more effective in reducing stock price crash risk. The findings enrich the research on the operational mechanisms and economic consequences of digital M&A, providing theoretical references for regulatory authorities to optimise M&A regulatory policies and for enterprises to assess the benefits and risks of digital M&A.

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Assessing abnormal returns: the case of Chinese M&A acquiring firms

Cited by 11 publications

References 24 publications

Grabbing hand or helping hand? Ownership interventions and acquirers returns; the role of provincial idiosyncrasies

Grabbing hand or helping hand? Ownership interventions and acquirers returns; the role of provincial idiosyncrasies

The potential impact of fundamental value, market value, and firm size as moderator variable on firm value at Indonesia palm oil company

Can digital M&A reduce the stock price crash risk?

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