Democratization in the host country and institutional risk of cross-border M&A: an empirical study on Chinese listed enterprises

Democratization in the host country and institutional risk of cross-border M&A: an empirical... We take the sample of Chinese listed enterprises’ cross-border M&A from 1999 to 2010 to construct a Poisson distribution model, and theoretically explore and empirically research how democratization in the host country influences the going-out process of Chinese enterprises. The overall results show that democratization impedes the inflows of Chinese enterprises’ cross-border M&A, because the higher the degree of democratization in the host country, the stronger the intensity of industry protection and the greater the power of trade unions—and this creates institutional risk for Chinese enterprises. We also find institutional risk aroused by democratization deeply influences the cross-border M&A of Chinese state-owned enterprises and the M&A flowing into the natural resources industry. This study contributes to further understanding democratization degree and institutional risk, and at the same time, it is also significantly meaningful for guiding the development and implementation of Chinese enterprises’ internationalization strategy. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Quality & Quantity Springer Journals

Democratization in the host country and institutional risk of cross-border M&A: an empirical study on Chinese listed enterprises

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Publisher
Springer Netherlands
Copyright
Copyright © 2012 by Springer Science+Business Media Dordrecht
Subject
Social Sciences, general; Methodology of the Social Sciences; Social Sciences, general
ISSN
0033-5177
eISSN
1573-7845
D.O.I.
10.1007/s11135-012-9822-0
Publisher site
See Article on Publisher Site

Abstract

We take the sample of Chinese listed enterprises’ cross-border M&A from 1999 to 2010 to construct a Poisson distribution model, and theoretically explore and empirically research how democratization in the host country influences the going-out process of Chinese enterprises. The overall results show that democratization impedes the inflows of Chinese enterprises’ cross-border M&A, because the higher the degree of democratization in the host country, the stronger the intensity of industry protection and the greater the power of trade unions—and this creates institutional risk for Chinese enterprises. We also find institutional risk aroused by democratization deeply influences the cross-border M&A of Chinese state-owned enterprises and the M&A flowing into the natural resources industry. This study contributes to further understanding democratization degree and institutional risk, and at the same time, it is also significantly meaningful for guiding the development and implementation of Chinese enterprises’ internationalization strategy.

Journal

Quality & QuantitySpringer Journals

Published: Dec 30, 2012

References

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