Edinburgh Napier University

  Two decades of market-oriented reforms and open-door policies have spurred the unprecedented growth of Chinese multinational corporations abroad. This paper considers the role of government and institutional influences on value creation through cross-border mergers and acquisitions by Chinese firms during the period from 1998 to 2008. The findings indicate that Chinese bidders experience wealth gains ranging from 0.73% - 0.89% over a 3-day event window. Our cross-sectional analysis indicates that the reforms in the foreign currency approval system, the deal size and the regional location of the target firms exert significant impact on shareholder wealth. Another intriguing finding is that Chinese acquirers that conform to the government resource-seeking policy achieve positive gains; this finding provides support for the conformity-performance debate under institutional theory.