【trailer】Corporate governance and bidder returns: Evidence from China's domestic mergers and acquisitions

Report time: on May 20, 2015 in the afternoon 14:0 0-1 5:30

Report location: chemical building room 207

Speaker: professor, school of the university of Salford Jia Liu

Chen says:

Professor Jia Liu has widely published in the international, SSCI-indexed finance journals. Her research interests focus on corporate finance, asset pricing, capital market, market microstructure, and market-based accounting research. Jia is Executive of the British Accounting and Finance Association (BAFA). Jia is Chair of the British Accounting and Finance Association (Northern Region). Jia also sits on the Corporate Governance SIG Executive Committee of the British Academy of Management (BAM), and the Committee of the CIIT & CIMA Business Case Awards Board (Asia). Jia has developed extensive collaborative projects with international partners on cross-disciplinary research. One of the recent projects include the European Union-China Public Administration Projects, in collaboration with the European Union, the governments of the EU member countries and China's ministries and governmental departments, as well as academic institutions in the EU and in China. Jia currently serves on the editorial boards of three journals, including British Accounting Review (SSCI indexed), Journal of Applied Accounting Research, and Journal of Risk Management. Jia edited a special issue of The Journal of Applied Accounting Research on the theme of "Accounting for Value and Governance" in 2014. She also regularly reviews for respected journals up to ABS 4* level and for books.

To tell the main topic:

Corporate governance and bidder returns: Evidence from China's domestic mergers and acquisitions

The reports content:

We examine the effects of corporate governance on bidder returns both in the short-term and in the long-term for China's domestic M&A deals. Using a sample of 1,921 M&A deals for the period of 2001- 2014, we find that market reactions differ in ways which suggest a difference in market's assessment of announcements from the perspectives of short-term and long-term shareholder wealth. Bidders obtain significant positive abnormal returns over the five-day event period, but suffer significant wealth losses two years following the deal announcement. Further analyses of factors driving the price difference show that state ownership and executive ownership exert opposite effects on the announcement period returns. Board independence measured by the composite corporate governance index plays an important role in shaping market reaction surrounding the announcement. Our long-term analysis, however, shows limited evidence that corporate governance mechanism can militate against managerial engagement in value-destroying acquisitions. The study highlights the need for the state to accelerate the share structure reform and, formulate policies that encourage executive ownership and sound corporate governance.