Performance and characteristics of acquiring firms in the Chinese stock markets

We investigate acquiring firms of 1148 M&A in the two Chinese stock markets. Using the market model, the CAPM model and the buy-and-hold method, we find significantly positive abnormal returns before (6 months) and upon M&A announcements, while the long-run abnormal returns (6 months) after M&A are insignificant. Cash is the dominant payment method and the competition during M&A is low. The cross-sectional analysis shows that the political advantages of acquiring firms have a significantly positive impact on the acquirers' performance, while the economic advantages do not. Finally, cross-provincial M&A and better corporate governance create value to acquiring firms.