Do mergers improve the shareholders´ wealth of acquirers? Evidence from the CTAR method

We investigate the long-run M&A performance of the listed firms in China based on a sample with a comprehensive 67 transactions. Using the Calendar-Time Abnormal Return method (CTAR), this paper finds that the performance of acquirers generally underperforms after the mergers. More over, the performance of acquirers marked by related party transactions, strong management ability or small size underperforms significantly compared with the performance of those marked by non-related party transactions, weak management ability or big size. In general, M&A activities in China actually destroy the shareholders´ wealth of acquirers. It is indicated from our results that the traditional synergy theory can not explain M&A activities in China well. In contrast, tunneling theory, agency theory and hubris theory can better account for the long-run performance and motives of M&A within Chinese listed firms.