Do Chinese firms benefit from government ownership following cross-border acquisitions?

Abstract

Chinese firms' increasing cross-border acquisitions (CBAs) in recent years seem to challenge the explanatory power of received theories of multinational enterprise (MNE) due to their relatively unique characteristics and the active role of the Chinese government. In this study, we seek to revisit and contextualize the OLI paradigm in conjunction with the institutionbased view and examine how Chinese firms' post-CBA long term performance is associated with government ownership. Our study shows that Chinese firms with more government ownership demonstrate better post-CBA long term performance. However, the above relationship is differentially moderated by such firm-level boundary conditions as political connections and financial slack, and the country-level institutional boundary conditions (i.e., the host country formal institutions and the home-host country cultural distance). We discuss our findings in detail and explore theoretical and practical implications for both Chinese firms and other emerging economy (EE) firms.

Does central bank independence matter for the location choices of Chinese firms’ foreign investments?

“…While some studies find that OFDI from emerging countries is insensitive to the political risk in host countries (Quer et al, 2012), others report that OFDI from emerging countries flows more to host countries with a high level of political risk and a low level of institutional quality (Buckley et al, 2007;Ramasamy et al, 2012;Kolstad and Wiig, 2012). This is in contrast with traditional theory which suggests that multinational enterprises prefer investing in countries with a low level of political risk and a high level of institutional quality (Tu et al, 2021). Empirical evidence on OFDI location choices of multinational enterprises from advanced economies provides support for this view (Ahlquist, 2006;Busse and Hefeker, 2007).…”

Home country influence in cross-border mergers and acquisitions by emerging market firms: a systematic review

“…In the post-M&A stage, some studies suggest a negative effect of cultural distance on EMF acquirers' integration and performance (Cheng and Yang, 2017;Kang et al, 2023;Li et al, 2016;Muralidharan et al, 2017;Tu and Zhang, 2022;Tu et al, 2021). Cultural distance also makes it difficult for Chinese acquirers to transfer tacit knowledge (Ai and Tan, 2018).…”

The Nexus between Corporate Performance and State Ownership in Vietnam: Evidence of State Ownership’s Inverted U-Shape and Provincial Business Environment Influences

“…On the other hand, the traditional resource-based theory has predominantly concentrated on market-derived resources and capabilities; an emerging body of literature has extended this perspective to encompass nonmarket-based political resources and capacities (Ahmad et al 2022;Tu et al 2021;Sharma et al 2020). Lux et al (2010) have proposed that political resources and capabilities increasingly influence corporate performance, especially within Western contexts.…”