Does R&D expenditure explain the stock market reaction to M&As? Evidence from the Chinese A-share market

Xin Xiang; Xu He

doi:10.1080/10293523.2019.1614757

Does R&D expenditure explain the stock market reaction to M&As? Evidence from the Chinese A-share market

Xin Xiang, Xu He

Research output: Contribution to journal › Article › peer-review

1 Citation (Scopus)

Abstract

We explore the impact of acquiring and acquired firms’ R&D expenditure on the market reaction to M&As. Using a sample of 9 739 Chinese M&A deals announced between 2009 and 2017, we find that acquired firms spending more on R&D expenditure react negatively to M&As, while acquiring firms with high R&D expenditure react positively to M&As. We further discuss the impact of R&D on market reactions when acquiring firms pay an offer premium, and we find that the premium leads acquired firms to react positively to M&As but results in negative market reactions to acquiring firms. Our results hold after we conduct robustness tests.

Original language	English
Pages (from-to)	75-88
Number of pages	14
Journal	Investment Analysts Journal
Volume	48
Issue number	2
DOIs	https://doi.org/10.1080/10293523.2019.1614757
Publication status	Published - 3 Apr 2019
Externally published	Yes

Keywords

R&D investment
mergers and acquisitions
premium payment
stock market reactions

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1080/10293523.2019.1614757

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title = "Does R&D expenditure explain the stock market reaction to M&As? Evidence from the Chinese A-share market",

abstract = "We explore the impact of acquiring and acquired firms{\textquoteright} R&D expenditure on the market reaction to M&As. Using a sample of 9 739 Chinese M&A deals announced between 2009 and 2017, we find that acquired firms spending more on R&D expenditure react negatively to M&As, while acquiring firms with high R&D expenditure react positively to M&As. We further discuss the impact of R&D on market reactions when acquiring firms pay an offer premium, and we find that the premium leads acquired firms to react positively to M&As but results in negative market reactions to acquiring firms. Our results hold after we conduct robustness tests.",

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author = "Xin Xiang and Xu He",

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AU - Xiang, Xin

AU - He, Xu

PY - 2019/4/3

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N2 - We explore the impact of acquiring and acquired firms’ R&D expenditure on the market reaction to M&As. Using a sample of 9 739 Chinese M&A deals announced between 2009 and 2017, we find that acquired firms spending more on R&D expenditure react negatively to M&As, while acquiring firms with high R&D expenditure react positively to M&As. We further discuss the impact of R&D on market reactions when acquiring firms pay an offer premium, and we find that the premium leads acquired firms to react positively to M&As but results in negative market reactions to acquiring firms. Our results hold after we conduct robustness tests.

AB - We explore the impact of acquiring and acquired firms’ R&D expenditure on the market reaction to M&As. Using a sample of 9 739 Chinese M&A deals announced between 2009 and 2017, we find that acquired firms spending more on R&D expenditure react negatively to M&As, while acquiring firms with high R&D expenditure react positively to M&As. We further discuss the impact of R&D on market reactions when acquiring firms pay an offer premium, and we find that the premium leads acquired firms to react positively to M&As but results in negative market reactions to acquiring firms. Our results hold after we conduct robustness tests.

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ER -

Does R&D expenditure explain the stock market reaction to M&As? Evidence from the Chinese A-share market

Abstract

Keywords

UN SDGs

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