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An empirical study of Chinese listed firms’ herd behaviour in cross‐border mergers and acquisitions

An empirical study of Chinese listed firms’ herd behaviour in cross‐border mergers and acquisitions Based on the sample of Chinese listed firms from 2003 to 2019, this paper investigated the herd behaviour in cross‐border mergers and acquisition (CB M&A) decisions using ordinary least‐squares (OLS) and feasible generalised least squares (FGLS) models. It was found that the Chinese listed firm CB M&A location decisions were similar to the choices made by other firms in the same industry in the previous year, with the bellwether firms in high industry market positions being the key reference objects. The herd behaviour was found to be more pronounced when the firms were younger and smaller, there was strong internal industry competition, estranged bilateral political distances, and poor host country governance. The quantification of the economic consequences of the herd behaviour revealed a negative effect on the short‐term performances after the CB M&As but improved firm performances over the long term, with these improvements being more significant when the herd behaviour was led by bellwether firms. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting & Finance Wiley

An empirical study of Chinese listed firms’ herd behaviour in cross‐border mergers and acquisitions

Accounting & Finance , Volume Early View – Oct 5, 2021

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Publisher
Wiley
Copyright
Accounting and Finance © 2021 Accounting and Finance Association of Australia and New Zealand
ISSN
0810-5391
eISSN
1467-629X
DOI
10.1111/acfi.12853
Publisher site
See Article on Publisher Site

Abstract

Based on the sample of Chinese listed firms from 2003 to 2019, this paper investigated the herd behaviour in cross‐border mergers and acquisition (CB M&A) decisions using ordinary least‐squares (OLS) and feasible generalised least squares (FGLS) models. It was found that the Chinese listed firm CB M&A location decisions were similar to the choices made by other firms in the same industry in the previous year, with the bellwether firms in high industry market positions being the key reference objects. The herd behaviour was found to be more pronounced when the firms were younger and smaller, there was strong internal industry competition, estranged bilateral political distances, and poor host country governance. The quantification of the economic consequences of the herd behaviour revealed a negative effect on the short‐term performances after the CB M&As but improved firm performances over the long term, with these improvements being more significant when the herd behaviour was led by bellwether firms.

Journal

Accounting & FinanceWiley

Published: Oct 5, 2021

Keywords: Cross‐border M&A; Herd behaviour; Location choice; The Belt and Road initiative; Performance

References