Efficiency characteristics of target companies for merger and acquisition: Evidence from China

Chiun Jung Lin, Qiusheng Zhang, Jin-Li Hu

Research output: Contribution to journalArticlepeer-review

Abstract

There is evidence of the efficiency of takeover target companies in the incipient Chinese market which has several types of mergers and acquisitions (M&A). These include market-driven takeovers, affiliate-predominated takeovers and government-predominated takeovers. This paper is based on the research in the selected major M&A transactions in China after 2005 when share trading regulations were reformed. Data envelopment analysis (DEA) is applied to compute the premerger efficiency of target companies. The research findings provide evidence from China to confirm various efficiency characteristics of different types of takeovers and to verify the effect of the market for corporate control (MCC). Our research reflects a planned economy in transformation, and also demonstrates that DEA can be applied to identify the pre-merger efficiency of targets.

Original languageEnglish
Pages (from-to)343-350
Number of pages8
JournalActual Problems of Economics
Volume148
Issue number10
StatePublished - 1 Jan 2013

Keywords

  • Corporate control
  • Data envelopment analysis
  • Efficiency
  • Mergers and acquisitions
  • Profitability

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