Bidder Returns and Corporate Governance: Evidence from China’s domestic Acquisitions and Mergers

Abstract

This study examines how corporate governance influences short-term and long-term bidder returns from China’s domestic mergers and acquisitions during 2007-2016. Our initial results from events analyses show that market responses differ in ways which suggest a difference in how the market’s assessment of share price from the perspectives of short run and long run. Our long-term regression analyses show that the positive impact of executive ownership remains. Independent directors record a negative effect on abnormal returns. Nevertheless, board independence measured by the composite corporate governance index exerts a significant, positive effect on shareholder wealth.