The role of state ownership on acquisition premia: Do Chinese enterprises pay systematically higher acquisition premia?

Usually, high acquisition premia are considered to be a proxy for aggressive management style, extremely risk-taking behavior and poor managerial decision making and ultimately failure. In the case of China, it is questionable if this assumption can hold true. In general, cross border MA Shimizu et al., 2004) How comes that, if profits and appropriate acquisition premia, crucial for success, are extremely hard to generate, still so many Chinese investors acquire European targets? Employing a dataset of 531 Chinese outward cross-border M&As over the period of 1996 to 2017, roughly half of it is conducted by SOE. This paper finds that, on average Chinese MNEs pay higher acquisition premia than other Non-Chinese investors do for similar targets. The question that arises out of these findings is why Chinese investors are willing to pay more than their peers? (Less)