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Politics, culture and M&As’ transaction completion

Politics, culture and M&As’ transaction completion PurposeMergers and acquisitions (M&As) dominated by Chinese enterprises have become increasingly conspicuous and prevalent in recent years. However, many of them were obstructed by foreign governments on the ground of “Threating National Security”. Overseas acquisition is a crucial step of Chinese Government’s “Going-Out” strategy, so analyzing the attribution of its success and failure is very important.Design/methodology/approachThis paper adopts empirical study method to analyze the factors from political and cultural perspectives based on a sample of 327 cross-border M&A transactions made by all listed companies in China from 1997 to 2010.FindingsThe result shows higher failure rate for those acquisition targets which could be classified as political sensitive assets; meanwhile, positive diplomatic relations and higher bilateral trust between China and the host country will facilitate the M&A transaction.Originality/valueThis paper offers a new research angle on cross-border M&As, which is the impact of culture factors, as well as diplomatic relationship, bilateral trust and war history between China and the host country on M&A transactions. This paper also constructs several ways of measuring the diplomatic relationship between countries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Nankai Business Review International Emerald Publishing

Politics, culture and M&As’ transaction completion

Nankai Business Review International , Volume 9 (3): 25 – Aug 6, 2018

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
2040-8749
DOI
10.1108/NBRI-05-2017-0023
Publisher site
See Article on Publisher Site

Abstract

PurposeMergers and acquisitions (M&As) dominated by Chinese enterprises have become increasingly conspicuous and prevalent in recent years. However, many of them were obstructed by foreign governments on the ground of “Threating National Security”. Overseas acquisition is a crucial step of Chinese Government’s “Going-Out” strategy, so analyzing the attribution of its success and failure is very important.Design/methodology/approachThis paper adopts empirical study method to analyze the factors from political and cultural perspectives based on a sample of 327 cross-border M&A transactions made by all listed companies in China from 1997 to 2010.FindingsThe result shows higher failure rate for those acquisition targets which could be classified as political sensitive assets; meanwhile, positive diplomatic relations and higher bilateral trust between China and the host country will facilitate the M&A transaction.Originality/valueThis paper offers a new research angle on cross-border M&As, which is the impact of culture factors, as well as diplomatic relationship, bilateral trust and war history between China and the host country on M&A transactions. This paper also constructs several ways of measuring the diplomatic relationship between countries.

Journal

Nankai Business Review InternationalEmerald Publishing

Published: Aug 6, 2018

References