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ID: 143776

Cross-Border mergers and acquisitions by Chinese firms: value creation or value destruction? / Wu, Xianming; Yang, Xingrui ; Yang, Haibin ; Lei, Hao

Wu, Xianming	Article
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Summary/Abstract

Mixed results from studies on Chinese cross-border mergers and acquisitions (M&As) have been a puzzle for both academia and business professionals over the years. Do these M&As create value when Chinese firms acquire foreign target firms suffering heavy losses and even on the verge of bankruptcy? This article explores the wealth effect of M&As conducted by Chinese firms as well as the relevant factors from the asset-seeking perspective. The authors use 180 M&A cases conducted by listed firms in China between 2002 and 2012 as samples and examine their wealth effects in a method of event study. The results show that these M&A activities have produced significant positive wealth effects during the event window of [–10, 10]. The authors then study the key factors affecting wealth effects. The findings reveal that an acquiring firm’s strength via research and development (R&D) and M&A experience generates significant positive impacts on the wealth effect. The findings also reveal that an innovation orientation and development stage of host countries helps create positive wealth effects; vertical M&As are particularly favored by the market since they can gain easier access to R&D, marketing channels or mineral resources.

Key Words

R&D ; Chinese Firms ; Acquisitions ; Cross-Border Mergers ; Value Creation ; Value Destruction

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ID: 173877

Exploring linkages between corporate governance and business performance: does good corporate governance lead to enhanced business value? / Nag, Tirthankar; Chatterjee, Chanchal

Chatterjee, Chanchal	Journal Article
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This study explores the influence of corporate governance practices in corporate boards on firm performance and draws insights on the relative importance for companies for fostering the development of governance mechanisms in business. The study examines 50 firms belonging to the benchmark index of the National Stock Exchange of India (NIFTY 50) and tracks them for over a five-year period. The study uses fixed and random effect econometric models to explore the relationship between corporate governance variables, and firm performance using both accounting returns (EVA, ROA and ROE) and market returns (MVA). The study finds that corporate governance variables significantly improve firm performance or value creation. Especially, multiple directorships, involvement of foreign institutional investors and increase in promoter holdings may significantly affect returns of the firm. The study suggests that it may be useful to foster better corporate governance practices and monitor linkages with firm performance as the effect is influenced by other control variables also.

Key Words

Corporate Governance ; Firm Performance ; Value Creation ; Corporate Reporting

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