Location, Proximity, and M&amp;A Transactions

Cai, Ye; Tian, Xuan; Xia, Han

doi:10.1111/jems.12159

Cited by 41 publications

(22 citation statements)

References 97 publications

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“…In addition, studies conducted from the geographical perspective have distinguished M&A from other entry modes of corporate investment and indicated that the engagement of corporates into M&A is significantly correlated with locations and contextual factors (Chapman, 2003;Green & Meyer, 1997;Mariotti, Piscitello, & Elia, 2014). Therefore, M&As could be viewed as spatial phenomena accompanied by element reallocation and economic restructuring (Cai, Tian, & Xia, 2016;Lehto, 2006;Zademach, 2005).…”

Section: Literature Reviewmentioning

confidence: 99%

Spatial proximity, localized assets, and the changing geography of domestic mergers and acquisitions in transitional China

Wei

Chen

2020

Growth and Change

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Mergers and acquisitions (M&As) are the main force of spatial restructuring in the location of economic decision making. This paper analyzes the changing geography of M&As and its influencing factors in China during the period of 2002–2016. It shows a significant “core‐periphery” spatial pattern or network structure, in which a core group of major metropolises and developed provinces, led by Beijing, Shanghai, Guangdong, Zhejiang and Jiangsu, dominates China's M&As market and inter‐regional networks, marginalizing the other regions. The descriptive and modelling results indicate that spatial proximity and corporate preferences for localized assets can shape this geography of China's domestic M&As. The findings confirm that the “home bias” does exist in China's M&As partnering. Meanwhile, the key drivers of China's domestic acquirers are their desire to access and internalize localized assets, especially in the emerging market, new technology, and policy advantages. This study enriches the existing knowledge about the determinants of inter‐regional M&As in emerging economies (e.g., China), where the influences of regional disparities in the institutional setting, industrial structure, as well as economic marketization and financialization are more significant.

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Section: Literature Reviewmentioning

confidence: 99%

Spatial proximity, localized assets, and the changing geography of domestic mergers and acquisitions in transitional China

Wei

Chen

2020

Growth and Change

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“…Entrepreneurs may prefer living close to their families, or they could derive economic benefits for the firm by locating in an area where they have more social capital, which could help them obtain financing, recruit employees, and establish customer networks (e.g., Borowiecki (2013), Dahl and Sorenson (2012), and Hoang and Antoncic (2003)). Indeed, Cai, Tian, and Xia (2016) use firm founder birth location as an instrument for predicting firm locations in a study of merger outcomes. Similarly, Yonker (2017) demonstrates that firms are significantly more likely to hire CEOs who hail from the same home state, which supports the idea that CEOs prefer locating close to their place of origin.…”

Section: Instrument 2: Founder's Home-state Corruptionmentioning

confidence: 99%

Corruption and Corporate Innovation

Ellis

Smith

White³

2019

J. Financ. Quant. Anal.

111

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We examine whether political corruption impedes innovation. Using a comprehensive sample of U.S. firms, we find that corruption has a substantial, negative relation with the quantity and quality of innovation. These results are robust to using various fixed effects, proxies for corruption and innovation, and subsamples. To establish causality, we employ 2 instruments for corruption: local ethnic diversity and the corruption of the state a firm’s founder grew up in. Corruption appears to reduce innovation output both on average and for the most innovative firms. Overall, this evidence is consistent with the notion that corruption reduces social welfare by impeding innovation.

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“…In a number of studies, the authors focus on the allocation of geographical factors. Y. Cai et al [14] found that the behavior of firms located in industrial areas has significant differences. We believe that this indirectly confirms that countries with different levels of industrial development may have different premiums.…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Premium evaluation in mergers and acquisitions of electricity companies

Sterkhov

2019

КФ

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The purpose of the article is to build a model for estimating the relative premium in mergers and acquisitions of electric power companies, based on four groups of factors: the company's operating and financial results, the country affiliation, the industry affiliation, the debt market conjuncture. The research methodology is based on a comparative business valuation method. The empirical base of the research includes data on 6504 deals that occurred throughout the world from 1997 to 2018. The research database includes data on both public and non-public companies for which the amount paid in the deal is known, as well as the value of total assets. The scientific novelty consists in clarifying the conceptual apparatus (the concept of relative premium in a deal has been introduced); the selection and grouping of factors affecting the size of the relative premium; identifying and quantifying the influence of variables included in each group of factors. The article proposed the author's approach to the grouping of countries and industries, based on the equality of premium coefficients in the regression and obtained groups of countries and industries with equal premiums. It is shown that the grouping of industries, obtained by the mathematical algorithm, almost completely corresponds to the industry structure of the electric power industry. The coefficient of determination of the final econometric model is more than 20 per cent, which can be estimated as a high-quality assessment. That is because the relative premium, not the amount paid in the deal, is predicted which is in close correlation with the value of the company's assets. The practical significance of the research study consists in the possibility of predicting the value of a business, as well as determining the value paid in a deal in cases where such information is not available in available sources.

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Location, Proximity, and M&A Transactions

Abstract: In this paper, we examine how the geographic location of firms affects acquisition decisions and

Cited by 41 publications

References 97 publications

Spatial proximity, localized assets, and the changing geography of domestic mergers and acquisitions in transitional China

Spatial proximity, localized assets, and the changing geography of domestic mergers and acquisitions in transitional China

Corruption and Corporate Innovation

Premium evaluation in mergers and acquisitions of electricity companies

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