Title: Do digital mergers and acquisitions driven by industry trends create value? Evidence from China

Authors: Jingyi Guan; Xiaoyi Zhuang; Eping Liu

Addresses: School of Accounting, Guangdong University of Finance and Economics, Guangzhou, China ' School of Accounting, Guangdong University of Finance and Economics, Guangzhou, China ' School of Business, Sun Yat-sen University, Shenzhen, China

Abstract: Previous mergers and acquisitions (M&A) waves drove firm expansion but also caused financial instability and regulatory issues, leading to market downturns. Our study investigates whether digital M&A, influenced by industry dynamics in the digital economy, creates value for firms. We analyse M&A transactions of China's A-share listed firms from 2010 to 2022, focusing on industry spillover effects and changes in long-term market performance. Results show that prior-year digital M&A in the same industry promotes firms to pursue digital M&A, but the long-term market performance tends to be poor. The decline is linked to increased R&D investment driven by industry trends, resulting in excessive spending. Heterogeneity tests reveal that weak digital capabilities, low business similarity, and less positive M&A announcement sentiment worsen long-term performance. Governance mechanisms include sending management to the target, boosting compensation incentives, and enhancing external oversight. Our findings highlight risks in digital M&A, offering insights for company decision-makers.

Keywords: digitalisation; M&A; spillover effects; market performance; R&D investment; China.

DOI: 10.1504/IJBAAF.2026.155764

International Journal of Banking, Accounting and Finance, 2026 Vol.16 No.1, pp.27 - 63

Received: 09 Nov 2024
Accepted: 19 Mar 2026
Published online: 13 Aug 2026 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article