This paper focuses on two of the key determinants of Chinese cross-border
M&A performance, industry preference and currency appreciation. Our results
show that although resource-related bidders may be motivated to pursue
national strategic goals, they do not sacrifice their shareholders’ wealth.
The substantial RMB appreciation following the exchange rate reform leads to
higher bidder abnormal returns in the short-term, with no long-term reversal.
We find that the insignificant long-term abnormal returns are mainly due to
the enhanced empire building invectives and other agency costs of cash-rich
firms in some of the currency-driven acquisitions
