Performance of Mergers and Acquisitions in Healthcare Industry-Evidence from Taiwan and China
Date Issued
2015
Date
2015
Author(s)
Weng, Chien-Hsiu
Abstract
Our aim in this study is to investigate whether industry relatedness effect the M&A performance. A sample of 244 M&A events of healthcare industry from Year 2002-2012 in China and Taiwan are selected and examined for post-merger abnormal return and operation performance. Our results show that Shanghai Stock Exchange listed acquires have a higher return performance than Shenzhen Stock Exchange and Taiwan Stock Exchange listed acquirers in both short-term and long-term. For investigating whether industry relatedness affect the operating performance of firm M&A, we create a classified method to determine relatedness between acquirer and target firm in healthcare industry. The results show that relatedness has a significantly positive effect on long term ROA performance for acquirer whereas the previous method using the first two digits of SIC code does not provide a significant positive result. Further, we find that financial performance is improved through a frequent acquisitions in healthcare industry in the long term. Our evidence also suggest that firm size and cash flow ratio are positively related to the M&A long-term performance in the healthcare industry.
Subjects
Merge and acquisition
Healthcare industry
Cumulative abnormal return
Operating performance
Industry relatedness
Type
thesis
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