Chapter

Merger Activities and Stock Market Valuation in China

Edited by Ho-Mou Wu

in Financial Sector Development in the Pacific Rim

Published by University of Chicago Press

Published in print April 2009 | ISBN: 9780226386843
Published online February 2013 | e-ISBN: 9780226386867 | DOI: http://dx.doi.org/10.7208/chicago/9780226386867.003.0020
Merger Activities and Stock Market Valuation in China

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This chapter examines the nature of merger and acquisition (M&A) activity and analyzes how it affects a company's value in China's stock markets. It looks at 1,363 M&A events involving 1,086 companies traded on the Shanghai and Shenzhen stock exchanges from 2004 to 2005. The results demonstrate that although China's stock market might not have reached the level of efficiency of the more-advanced economies, its efficiency in assessing the value of M&A activities might have been improved from 2004 to 2005. The stock market valuation of M&A events became mildly positive in 2005, which may help to enhance the allocative role of China's stock market in the future.

Keywords: mergers; acquisitions; Chinese stock markets; valuation; Shanghai; Shenzhen

Chapter.  6859 words.  Illustrated.

Subjects: Business and Management

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