Mergers and acquisitions by Chinese firms: A review and comparison with other mergers and acquisitions research in the leading journals

Hong, Zhu; Zhu, Qi

doi:10.1007/s10490-016-9465-0

Cited by 89 publications

(70 citation statements)

References 228 publications

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“…In terms of a definition of M&A, many exist and it is generally understood that a 'merger' commonly implies a combination of two firms that are relatively equal whereas an 'acquisition' is a type of merger where one firm buys a controlling interest in another [53]. Different transaction types exist including joint-ventures (JVs), Public-Private Partnership (PPP) JV types, leveraged buyouts, spin-offs, and different kinds of partial or full acquisitions such as asset purchase transactions or share purchase agreements [54].…”

Section: Mergers and Acqusitionsmentioning

confidence: 99%

“…The subsequent M&A process steps include identifying and selecting the target(s) on the part of the bidder as well as deciding to sell on the part of the target, the negotiation process, due diligence, deal announcement, deal completion, post-merger integration (PMI), performance measurement, and hopefully value creation [53]. M&A process complexity is generally understood within academia to intensify in cross-border M&A deals, where the target is located in a different country than the country of the acquirer's head office, compared to 'within-country' or domestic M&A transactions [53,55]. Much academic literature has traditionally been quantitative in nature and has to a large extent concentrated on M&A activity of publicly traded firms in the United States (US) mainly because M&A activity has historically been more intense in the US and also because of data availability [55].…”

Section: Mergers and Acqusitionsmentioning

confidence: 99%

“…According to Zhu and Zhu [53], motivations behind M&A deals can be to integrate the two firms to create value and increase performance of the combined entity going forward (strategic M&A deals) or for a financial investor to acquire a target and subsequently sell the acquired firm at a higher price (financial M&A deals). From a value perspective, most M&A transactions create an uneven distribution of the value generated where target firms obtain the largest share of the value and it is largely understood within academia that the acquirers rarely create value from M&A transactions [55].…”

Section: Mergers and Acqusitionsmentioning

confidence: 99%

“…In their seminal work, Haspeslagh and Jemison [57] suggested that it is often decisions in the pre-acquisition stage that cause the many negative post-merger outcomes. According to the extensive reviews of Haleblian et al [55] and Zhu and Zhu [53], scientists increasingly focus on researching the value creating conditions that make up the minor portion of deals where value is created for acquirers.…”

Section: Mergers and Acqusitionsmentioning

confidence: 99%

“…For the wind industry, the above mentioned 2011 ministerial decree [78] stipulated that JV formations, equity investment, and M&A transactions would be particularly encouraged by the government and institutionally the banks were needed in order to support this in terms of financing. The banks were decreed, e.g., by the 2015 "Guidelines on risk management of commercial bank merger and acquisition loans" issued by the China Banking Regulatory Commission [53] to support the internationalization efforts. Accordingly, the Chinese banking sector, led by China Development Bank and Export-Import Bank of China, as well as commercial banks such as Bank of China, Bank of Shanghai, China CITIC Bank, and Bank of Communications, was mobilized by the Chinese government and this led to increased outward cross-border M&A activity by the Chinese wind energy industry.…”

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confidence: 99%

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The (R)evolution of China: Offshore Wind Diffusion

Poulsen

Hasager

2017

Energies

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This research presents an industry level gap analysis for Chinese offshore wind, which serves as a way to illuminate how China may fast track industry evolution. The research findings provide insight into how the Chinese government strongly and systematically decrees state-owned Chinese firms to expand into overseas markets to speed up learning efforts. Insights are offered regarding the nation-level strategic plans and institutional support policies mobilized by China in order to be able to conquer market shares internationally by building a strong home market and then facilitating an end-to-end and fully financed export solution. This is interesting in itself and in particular so because it now also includes complex billion-dollar megaprojects such as turnkey offshore wind farm assets with an expected lifespan of 30+ years. Research findings are provided on how European and Chinese firms may successfully forge long-term alliances also for future Chinese wind energy export projects. Examples of past efforts of collaboration not yielding desired results have been included as well. At policy level, recommendations are provided on how the evolution of the Chinese offshore wind power industry can be fast-tracked to mirror the revolutionary pace, volume, and velocity which the Chinese onshore wind power industry has mustered.

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Section: Mergers and Acqusitionsmentioning

confidence: 99%

Section: Mergers and Acqusitionsmentioning

confidence: 99%

Section: Mergers and Acqusitionsmentioning

confidence: 99%

Section: Mergers and Acqusitionsmentioning

confidence: 99%

mentioning

confidence: 99%

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The (R)evolution of China: Offshore Wind Diffusion

Poulsen

Hasager

2017

Energies

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Foreign institutional investors and equity share decisions in cross‐border mergers and acquisitions

Wajda,

Bu,

Shi

2024

Global Strategy Journal

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Research SummaryThis study examines the role of foreign institutional investors in shaping acquiring firms' equity share decisions in cross‐border mergers and acquisitions (M&As). We argue that foreign institutional ownership (FIO) from a given country is positively associated with the share of equity sought in the target firm in this country because foreign institutional investors can help reduce information asymmetry between the acquiring and target firms. Moreover, this positive relationship is stronger if target firms are in countries with weaker institutional development because acquiring firms suffer from higher information asymmetry and thus are more inclined to rely on foreign institutional investors for information. Findings from a sample of 4166 cross‐border M&As by US firms lend support to our arguments.Managerial SummaryCan foreign institutional investors influence acquiring firms' equity share decisions in cross‐border M&As? We posit that local knowledge and information foreign institutional investors provide to acquiring firms can reduce uncertainty in the M&A process. Using data on cross‐border M&As by US firms, we find that high levels of FIO are positively associated with the equity sought in target firms by acquirers. This effect is stronger when target firms are located in countries with weak institutions. Our study highlights the beneficial role of FIO that firm executives should be aware of and has practical implications for how firms manage the M&A process.

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Theorizing about emerging multinationals' cross‐border acquisitions

Peng,

Wang,

Xie

et al. 2024

Global Strategy Journal

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Research SummaryThe emergence of multinational enterprises from emerging economies (emerging multinationals or EMNEs) has resulted in two puzzles: (1) Why do EMNEs often bid higher for targets in developed economies? (2) Why do EMNEs often allow such targets significant autonomy? From a theoretical standpoint, the two puzzles beg the question of whether an integrative answer exists. Extending property rights theory, we conceptualize an EMNE as a collection of assets over which an emerging‐economy firm has residual control, gained predominantly through cross‐border acquisitions. Leveraging a legitimacy‐based view, we suggest that EMNEs suffer from legitimacy deficits. Overall, the key to theorizing about EMNEs' cross‐border acquisitions and solving the two puzzles is to appreciate EMNEs' endeavors to simultaneously maximize joint value creation, minimize target incentive loss, and overcome legitimacy deficits.Managerial SummaryDriven by property rights thinking and legitimacy deficits considerations, multinational enterprises from emerging economies (emerging multinationals or EMNEs) often pay higher premiums for and grant significant autonomy to acquisition targets in developed economies. During the pre‐acquisition phase, EMNEs need to carefully evaluate targets' value‐creation potential and asset complementarity. During the post‐acquisition phase, offering autonomy to targets is advisable, if acquisition premiums are high, if pursued assets are knowledge‐based, and if target managers and employees as well as other stakeholders (such as host‐country governments) have raised major concerns. Although few EMNEs explicitly refer to research on property rights and legitimacy deficits, many of them have acted in a way that is consistent with such theoretical reasoning. Emerging‐economy acquirers that follow such reasoning often perform well.

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Mergers and acquisitions by Chinese firms: A review and comparison with other mergers and acquisitions research in the leading journals

Cited by 89 publications

References 228 publications

The (R)evolution of China: Offshore Wind Diffusion

The (R)evolution of China: Offshore Wind Diffusion

Foreign institutional investors and equity share decisions in cross‐border mergers and acquisitions

Theorizing about emerging multinationals' cross‐border acquisitions

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