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How do political connections cause SOEs and non‐SOEs to make different M&A decisions/performance? Evidence from China

How do political connections cause SOEs and non‐SOEs to make different M&A decisions/performance?... This study examines the impact that political connections have on Mergers and Acquisitions (M&A) performance and the decisions of Chinese listed firms. We find that political connections destroy (create) value in SOEs (non‐SOEs). Our findings show that connected SOEs are more likely to acquire local targets, especially when the local unemployment rate is high and when the firms are controlled by the local government, and they are less likely to conduct vertical mergers. M&A decisions of connected non‐SOEs are less influenced by the government; instead, political connections in non‐SOEs help bidders to integrate vertically and obtain external financing support. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting & Finance Wiley

How do political connections cause SOEs and non‐SOEs to make different M&A decisions/performance? Evidence from China

Accounting & Finance , Volume 59 (4) – Dec 1, 2019

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References (75)

Publisher
Wiley
Copyright
Accounting and Finance © 2019 AFAANZ
ISSN
0810-5391
eISSN
1467-629X
DOI
10.1111/acfi.12302
Publisher site
See Article on Publisher Site

Abstract

This study examines the impact that political connections have on Mergers and Acquisitions (M&A) performance and the decisions of Chinese listed firms. We find that political connections destroy (create) value in SOEs (non‐SOEs). Our findings show that connected SOEs are more likely to acquire local targets, especially when the local unemployment rate is high and when the firms are controlled by the local government, and they are less likely to conduct vertical mergers. M&A decisions of connected non‐SOEs are less influenced by the government; instead, political connections in non‐SOEs help bidders to integrate vertically and obtain external financing support.

Journal

Accounting & FinanceWiley

Published: Dec 1, 2019

Keywords: ; ; ; ;

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