Dr. Andrea Xu presented an insightful study titled “Anatomy of a Merger Wave Using the CAR Method.” Dr. Xu’s presentation explored the dynamics of a wave of Chinese acquisitions of U.S. targets following the opening of the Chinese stock market in 1990. Her research offered a fresh perspective on these acquisitions and their outcomes, challenging long-held beliefs in the field.
Using the Cumulative Abnormal Returns (CAR) method, Dr. Xu’s study revealed that these
Chinese acquisitions typically generated positive short-term announcement returns.
However, the research also found that their real effects were minimal and statistically
insignificant in the long run. This distinction highlights the complexity of evaluating
mergers solely based on immediate financial impacts versus long-term outcomes.
Additionally, Dr. Xu examined the factors influencing completion rates and announcement
gains. Her findings aligned with predictions from standard merger literature, reinforcing
established theories about the determinants of merger success. Notably, her research
debunked a common belief by demonstrating that state-owned enterprises and private
firms in China achieve similar outcomes in their acquisition efforts, underscoring
that ownership structure may not play as pivotal a role as previously assumed.
Dr. Xu’s presentation shed light on the nuanced dynamics of international mergers
and acquisitions, emphasizing the need for a balanced approach to analyzing their
impacts. By leveraging the CAR method, her work provides valuable insights into both
the short-term financial gains and the broader implications of such cross-border corporate
activities.
Farmingdale’s Research Colloquia series continues to highlight groundbreaking studies
that challenge conventional wisdom and spark meaningful discussions. Dr. Xu’s presentation
offered attendees a deeper understanding of the global mergers landscape, fostering
greater appreciation for the intricacies of international business strategies.