The impact of state ownership, formal institutions
and resource seeking on acquirers’ returns of Chinese
Published online: 4 February 2015
Ó Springer Science+Business Media New York 2015
Abstract We examine the effects of state ownership, institutions and resource-seeking
behavior on post-acquisition stock price returns of Chinese cross-border mergers and
acquisitions over the period 1998–2008. Chinese acquiring ﬁrms experience negative
returns ranging from 2.92 to 10.80 % in 12- and 60-month post-event periods, respectively.
State ownership (SOE), interaction between R&D and SOE, formal institutional distance
and acquirer size have a positive and signiﬁcant impact on the long-term acquirer returns.
However, the interaction between tangible resources and SOE and acquirer cash holdings
appears to have a negative and signiﬁcant impact on long-term returns. Overall, our results
suggest that the state and institutions constitute important sources of long-term value
creation for Chinese acquirers.
Keywords Long-term returns Á State ownership Á Institutions Á Mergers & acquisitions
JEL classiﬁcation G34 Á G38
Chinese ﬁrms are increasing their global reach through cross-border mergers and acquisi-
tions (CBM&A) activity. In 2005, 274 Chinese companies valued at $5.3 billion were
Leeds Business School, Leeds Beckett University, Leeds, UK
A. Boateng (&)
Glasgow School of Business & Society (GSBS), Glasgow Caledonian University,
Cowcaddens, Glasgow G4 0BA, UK
NUBS, University of Nottingham, Nottingham, UK
Rev Quant Finan Acc (2016) 47:159–178