Critically evaluate merger and acquisition (M&A) activities in Hong Kong

Zhou, Ying (2024) Critically evaluate merger and acquisition (M&A) activities in Hong Kong. [Dissertation (University of Nottingham only)]

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Hong Kong is a highly developed and mature economy with a well-established framework for mergers and acquisitions (M&A), benefiting from extensive experience in this field (Jin, 1998). Despite the active acquisition activity observed in recent years, there remains a dearth of research on M&A activities specifically in Hong Kong. This thesis aims to address this gap by investigating the predictability of M&A events among companies listed on the Hong Kong Stock Exchange (HKEX) since 2000, with a particular emphasis on identifying key determinants that influence their likelihood of becoming targets for M&A activities. Furthermore, this thesis seeks to evaluate the abnormal returns received by shareholders of target firms during M&A bid announcements. Distinguishing itself from prior studies, this thesis incorporates accounting and macroeconomic variables to identify significant factors at play.

The findings suggest that fluctuations in unemployment rates, CPI, FDI, and real interest rates have a significant impact on the selection of IPO firms listed in Hong Kong as target firms since 2000. The asset undervaluation hypothesis, dividend payout hypothesis, capital expenditure hypothesis, and stock market trading volume hypothesis align with previous empirical literature. The event study analysis reveals that M&A announcements have significant effects on stock returns, with abnormal returns ranging from 0.0591% to 7.8389%. Additionally, the operating profit margin and trade balance positively impact stock market run-ups.

In conclusion, this thesis provides practical recommendations for future M&A researchers, market investors, market regulators, and corporate executives. For instance, it assists scholars in identifying the decisive factors that contribute to a company's status as a target acquisition candidate and suggests strategies for companies to proactively avoid becoming targets of acquisition.

Item Type: Dissertation (University of Nottingham only)
Depositing User: Ying, Zhou
Date Deposited: 12 Mar 2024 02:40
Last Modified: 12 Mar 2024 02:40

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