Private Equity and M&As——Evidence from the GEM

Abstract

Abstract:

This paper investigates the impact of Private Equity (PE) on M&A performance in China GEM from 2009 to 2014. It is found that there are obvious preferences in the payment methods of M&A in which the PEs participate, which shows mixed payment > cash payment > stock payment. Although PEs are actively involved in M&A, they fail to improve the operating performance of acquirer after M&A. In addition, the wealth of shareholders during the announcement is significantly lower when the PEs participate in the M&A which reflects that the market reacts negatively to the events. These findings indicate that in China GEM, PEs have certain influence on M&A payment choices, but we do not find direct evidence that PEs can improve corporate performance.

Key words: private equity, mergers and acquisitions (M&A), operating performance

Wang Lei, Liu Hailin, He Xuehui. Private Equity and M&As——Evidence from the GEM[J]. , 2019, 31(1): 27-38.

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