The influence mechanism of industrial policies on Chinese companies' cross-border M&A decision-making

Abstract

This study explored the potential links between Chinese industrial policy and cross-border mergers and acquisitions by Chinese firms from 2009 to 2019. Based on describing China's industrial strategy and evaluating the then-current situation of Chinese enterprises' cross-border mergers and acquisitions, this empirical study constructed a two-way fixed-effect panel model and an intermediate effect model to assess the mechanism of industrial policy's influence on Chinese enterprises' cross-border mergers and acquisitions decisions. The findings were as follows: (1) Industrial policy could promote the implementation of cross-border mergers and acquisitions of Chinese enterprises; (2) By easing financial restrictions, industrial policy could improve firms' access to capital and encourage cross-border mergers and acquisitions. (3) Industrial policies could promote the high political relevance of state-owned enterprises, thus promoting the success of transnational mergers and acquisitions of enterprises. Therefore, it was significant to promote the transformation of industrial policy from subsidy-oriented to performance-oriented and rationally evaluate the risks and benefits of M&A for enterprises to complete cross-border M&A.

The Impact of Capital Structure Adjustment in Cross-Border Mergers and Acquisitions on the Operating Performance of Chinese Listed Companies: Empirical Study Based on Ridge Regression

“…We also propose relevant recommendations for enterprises that need to conduct cross-border M&A business. Firstly, when conducting cross-border M&A, companies should ensure that they have sufficient liquidity to cope with the short-term business risks that may be encountered in the process of M&A [11]. They should also assess whether they can achieve economies of scale after cross-border M&A to improve efficiency and profitability.…”