Market Reaction to Merger and Acquisition Announcements in China

Abstract

Developed-market evidence generally predicts lower acquirer returns when targets are publicly listed, because bidding competition, liquidity, and overpayment transfer more gains to target shareholders. In China, however, a listed target may bundle operating assets with a scarce financing and restructuring platform, disclosure credibility, and regulatory safety. Using China Stock Market & Accounting Research (CSMAR) M&A records and daily returns, this paper studies Chinese A-share listed acquirers. The event-level dataset contains 18,859 announcements and the clean event-study sample contains 12,596 observations. Average market-adjusted cumulative abnormal return (CAR) is 0.76% over [-3,+3] and 1.29% over [-10,+10]. Acquisitions involving listed targets are associated with significantly higher announcement returns across baseline specifications, narrower windows, and market-model returns. In the full model, the target-listed coefficient is 1.27 percentage points for CAR over [-3,+3] and 1.72 percentage points for CAR over [-10,+10]. State-owned acquirers also earn higher conditional returns after firm characteristics, transaction variables, momentum, and fixed effects are controlled for. The evidence supports a platform-acquisition interpretation in which investors price the financing, restructuring, transparency, and regulatory attributes attached to listed targets. The estimates remain conditional announcement-return evidence rather than causal evidence on long-run integration.