Shareholders' indifference horizontal ellipsis short-term market reaction to firms' first and subsequent acquisitions: evidence from China

Having analysed the history of acquisitions by public Chinese companies over the period of 1996-2020, we document no persistent statistically significant short-term market reaction upon deal completion. Short-term cumulative abnormal returns are non-different from zero regardless of whether the acquisition is the first or one of many on acquirers' record, whether it is domestic or cross-border or whether it is vertical or horizontal as well as regardless of industry and declared purpose of acquisition. In the overwhelming majority of cases, acquirers' prior acquisition experience plays no role in shaping short-term post-acquisition returns. Lower returns are associated with serial acquirers especially if the series of acquisitions occurs within the same industry. Likewise, significantly lower cumulative returns are observed if the acquiree is a state-owned entity. Overall, the markets appear to attach no abnormal returns to firms' inorganic growth regardless of its span across geographies, industries and time.