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Cross-border acquisitions by Chinese enterprises: The benefits and disadvantages of political connections

Title:

Cross-border acquisitions by Chinese enterprises: The benefits and disadvantages of political connections

Schweizer, Denis, Walker, Thomas and Zhang, Aoran (2017) Cross-border acquisitions by Chinese enterprises: The benefits and disadvantages of political connections. Journal of Corporate Finance . ISSN 09291199 (In Press)

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Official URL: http://dx.doi.org/10.1016/j.jcorpfin.2017.12.023

Abstract

This paper explores whether and how political connections affect the likelihood of completing a cross-border M&A deal for Chinese publicly listed, but privately-owned enterprises (POEs) and the resulting firm performance. In line with our proposed political connection trade-off theory, we find that POEs with politically connected top managers are more likely to complete a cross-border M&A deal than POEs with no such connections, but that this comes at the cost of negative announcement returns and subsequent lower accounting performance. These findings support the idea that politically connected top managers engage in “political empire building” behavior at the cost of shareholders' wealth.

Divisions:Concordia University > John Molson School of Business > Finance
Item Type:Article
Refereed:Yes
Authors:Schweizer, Denis and Walker, Thomas and Zhang, Aoran
Journal or Publication:Journal of Corporate Finance
Date:16 December 2017
Digital Object Identifier (DOI):10.1016/j.jcorpfin.2017.12.023
Keywords:China; Cross-border M&As; Emerging markets; Multinational enterprises; Political connections
ID Code:983370
Deposited By: DANIELLE DENNIE
Deposited On:04 Jan 2018 15:35
Last Modified:16 Dec 2018 01:00

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