Differences in returns to cross-border and domestic mergers and acquisitions: Empirical evidence from China using PSM-DID

Domestic mergers and acquisitions (M & As) are more common in China than overseas. To determine the underlying causes, we examine the different impacts of cross-border and domestic M & As on the performance of Chinese listed firms using PSM-DID on a sample of 1616 deals of M & As. We established that domestic M & As can earn more market value than cross-border M & As. Additionally, we established that no more value added is created by SOEs through M & As. These findings emphasize the important role of domestic production networks in China and suggest that the Chinese government should consider the promotion and optimization of domestic industrial integration.

Automated summary

Domestic mergers and acquisitions are more frequent in China compared to international ones. Through PSM-DID analysis on a sample of 1616 M&A deals, we found that domestic M&As have a greater impact on the performance of Chinese listed firms. Furthermore, we discovered that state-owned enterprises (SOEs) do not add additional value through M&As. These findings highlight the significance of domestic production networks in China and suggest that the Chinese government should focus on promoting and optimizing domestic industrial integration.