International investors' reactions to cross-border acquisitions by emerging market multinationals
International Business Review
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Ning, L., Kuo, J., Strange, R., & Wang, B. (2014). International investors' reactions to cross-border acquisitions by emerging market multinationals. International Business Review, 23 (4), 811-823. https://doi.org/10.1016/j.ibusrev.2013.12.003
How do international investors react to announcements of cross-border mergers and acquisitions (CM&As) by emerging market multinational enterprises (EMNEs)? Using a unique and manually-constructed firm-level dataset, this paper examines the stock price reactions to CM&A announcements made over the period 1991-2010 by Chinese MNEs listed on the Hong Kong Stock Exchange and the wealth impacts of their corporate governance. Our empirical findings confirm a positive stock price reaction on average, and suggest that international investors react positively to the presence of large shareholders, but negatively to the presence of institutional shareholders. There is a negative impact if the largest shareholder is either the State or the corporate founder. We suggest that this is because the international investors perceive potential principal-principal conflicts in such ownership/control constellations and discount equity prices accordingly. We also find that Board size and independence have positive effects on the price reaction, but that large supervisory boards engender negative reactions. © 2013 Elsevier Ltd.
External DOI: https://doi.org/10.1016/j.ibusrev.2013.12.003
This record's URL: https://www.repository.cam.ac.uk/handle/1810/266032