An Empirical Research on Shareholders' Wealth Effect in Cross-border Mergers and Acquisitions

The paper uses the 103 listed companies which have successful conducted cross-border MAs in Shanghai and Shenzhen stock exchanges from 2005 to 2010 as samples, and adopts the methodology of event study to study the shareholders' wealth changes before and after the cross- border mergers and acquisitions of the Chinese listed companies. It finds that in the [-1,1] event period, the cumulative average excess return of the acquiring company in the significant level of 10% is 1.28%, while in the[-40,40] event period, the cumulative average abnormal return(CAR) in the level of1% is-1.48%, which is significantly less than zero. This result indicates that the crossborder MA events have some announcement effects, but in the long run, the shareholders of the listed company in China are not optimistic about their cross-border mergers and acquisitions, because the cross-border MA events will create value, and shareholders' wealth may have a significant loss.