An examination of long-term post-merger performance of listed companies in China

Date of Award


Degree Type

UG Dissertation (Restricted)




Our study has used event study to examine the long-term post-merger performance of acquiring firms in China. To measure a stock’s abnormal performance, we have employed the model of both Dimson and Marsh (1986) and Lakonishok and Vermaelen (1990) which has been adjusted for the firm size and beta risk. Using 36 mergers and acquisitions during 1994 to 1997, we have found that over the post-merger period, acquiring firm cannot reap any significant cumulative average abnormal return from the merger. The result implies that merger cannot really help the corporate to achieve better long-term performance. The underlying reasons may be due to: the accumulative bureaucratic problems of state owned enterprises, the difficulties of post-merger implementation process and hubris hypothesis. We conclude that merger and acquis ition may not be an effective restructuring method in China.

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