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The Wealth Effects of U.S. Firms’ Takeovers in China

Author(s): WenjiaZhang

Journal: International Journal of Economics and Research
ISSN 2229-6158

Volume: 2;
Issue: 1;
Start page: 118;
Date: 2011;
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Keywords: Takeover | Emerging Market | WTO | Initial Exposure

As an important emerging market, China is providing international acquirers many unique opportunities and challenges. Based on former research, the author conducted both univariate and multivariate tests on possible predictors. Direct evidence proves that U.S. firms pocket benefit from their international adventure into china, especially after China joined the WTO; the initial exposure gains more than non-initial exposure; full takeovers of Chinese target firms elicit positive market reaction. And when the U.S. bidders expend into china within cored industry after WTO or with initial exposure, synergy play a role in creating optimistic expectations on the stock market, whereas focused takeover itself could not give the market strong enough signal.
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