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

Abstract

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.

Grabbing hand or helping hand? Ownership interventions and acquirers returns; the role of provincial idiosyncrasies

“…Chen, Zhai, Wang, & Zhong, 2015). An institutional perspective is therefore relevant to understanding the performance outcomes of Chinese firms after government interventions as existing studies have found variations in provincial institutions in China (Tang et al, 2010;Wei, Wu, Li, & Chen, 2011;Wu et al, 2020;C. Zhang et al, 2019).…”

“…A growing literature argues that firms' decisions are influenced by their institutional context, including regional or industrial (Wu, Wei, & Chen, 2020; C. Zhang, Rasiah, & Cheong, 2019). These studies have argued that locations within a country are not uniform, and hence locational characteristics are likely to affect firms differently.…”

Firm Heterogeneities, Multi-Dimensional Proximities, and Systematic Dynamics of M&A Partnering: Evidences from Transitional China

“…Spatial closeness can also facilitate the face-to-face exchange of tacit knowledge and the sharing of fixed assets [49,50], which will contribute to the success of post-M&A integration. With the increased information revolution, the effects of geographical proximity or "home bias" on M&A partnering, especially that initiated by large acquirers (e.g., MNEs and listed firms) with a stronger ability to internalize longdistance resources, would weaken to a certain extent [53].…”

“…In the late 1990s, the deepening of market-oriented reform led to the rise of corporate M&As in China. Since the early 2010s, the number of China's M&A events increased drastically due to rapid industrialization, corporate expansion, and encouraging policies [53,54]. Based on previous findings and the unique contexts, we develop a conceptual framework to explain the variations of the impacts of corporate heterogeneities and proximities on M&A partnering in transitional China (see Figure 1).…”

“…Existing studies have documented that corporate M&As would be more active in China's coastal regions dominating the national M&A network [53]. The YRD, one of the coastal urban agglomerations with a higher level of economic development and regional integration in China [62,63], was selected for the case study because the following reasons: First, as the frontier of China's reform and opening-up, the YRD provides a wide range of research samples and cases for studying the national economic structure and corporate behavior.…”