Do firms experience enhanced productivity after cross-border M&As?

Abstract

This paper used a dataset of 86 cross-border M&A cases by Chinese listed firms from 2007 to 2012 and matched them with 81 domestic M&A cases to examine the post M&A performances. First, Probit and Logistic estimation methods were used to analyze whether the Chinese listed firm M&A decisions (cross-border or domestic) affected productivity levels, after which FGLS and OLS estimations were conducted to estimate the productivity changes five years before and after the merger years. It was found that firms involved in cross-border M&As have higher productivity than the domestic M&A group. However, in contrast with the domestic M&A, there was no significant productivity enhancements after the cross-border M&As. Further investigations found that state-owned enterprises (SOEs) performed better than privately-owned enterprises after the mergers and that firms located in developed areas were more likely to experience significant productivity enhancements after the cross-border M&As.