Research into the wealth effects of M&A activity generally concludes that substantial value is created for target shareholders. Whereas the evidence from the developed markets is overwhelming, fewer studies have been conducted using data from emerging markets. In this thesis, we will study the wealth consequences for Chinese listed companies in domestic takeovers. Using a sample of 160 “legal-person” share transactions involving the companies listed on the Shanghai Stock Exchange (SHSE) and Shenzhen Stock Exchange (SZSE) between 1996 and 2000, empirical tests are carried out to examine whether the targets’ “A share” shareholders gain in corporate restructurings. The tests reveal that the Chinese stock markets are efficient in terms of correctly anticipating new information relating to the M&As before they are announced to the public and on average targets’ shareholders benefit from such takeovers. Further analysis, however, reveals certain characteristics of acquisitions that result in more value being created than others, and in some cases targets’ shareholders lose wealth as a result of the acquisition.