Unrelated acquisitions in China: The role of political ownership and political connections

Arnoldi, Jakob; Muratova, Yulia

doi:10.1007/s10490-018-9571-2

Cited by 33 publications

(17 citation statements)

References 61 publications

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“…Secondly, our results contribute to the existing body of knowledge on the performance consequences of connections in emerging markets (e.g. Arnoldi & Muratova, 2018; Claessens et al., ; Khwaja & Mian, ; Lu, ). Being a transitional economy, Pakistani is experiencing significant institutional changes and market institutions are still in their infancy (Settle, ).…”

Section: Introductionsupporting

confidence: 68%

Political connections and corporate performance: Evidence from Pakistan

Saeed

Belghitar

Clark

2019

Econ of Transit and Inst Chang

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This study seeks to understand how political connections affect firm performance. Using a hand‐collected dataset of Pakistani firms from 2008–2014, our firm fixed effects and Heckman two‐stage regression results show that connected firms outperform those without political ties. Moreover, we show channels through which political benefits are realized in terms of greater access to debt, lower financing costs and lower tax rates. These benefits are found to be particularly large when firms are connected to politicians who held political positions most recently and firms connected through their owners. Finally, we do not find evidence for differences in political favours across regulated and unregulated industries.

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Section: Introductionsupporting

confidence: 68%

Political connections and corporate performance: Evidence from Pakistan

Saeed

Belghitar

Clark

2019

Econ of Transit and Inst Chang

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“…This is potentially related to the preferential policies enjoyed by SOEs. Meanwhile this might be the results of certain unique features of M&A in the China market, as some M&A deals are characterised by government intervention and political support, especially for SOEs (Arnoldi & Muratova, 2019;Sha et al, 2020). The evidence also confirms the role of institutional investors in reducing information asymmetry, while finding that institutional investors in China do not accurately predict the authenticity of M&A rumours.…”

Section: Discussionmentioning

confidence: 91%

Market reactions for targets of M&A rumours—evidence from China

Yang

Chen

2021

Economic Research-Ekonomska Istraživanja

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This paper investigates investors' reactions to takeover rumours in China's stock markets from 2004 to 2014. While we find prerumour price run-ups (abnormal returns) for merger and acquisition (M&A) targets, the pre-rumour market overreaction is significantly positive only for target firms that are state-owned enterprises (SOEs). There are no significant abnormal returns for M&A rumour targets over a 41-day event window (À20, þ20). Nonetheless, capital market reactions to true rumours are higher than reactions to false rumours, indicating that investors can typically distinguish between them. Finally, we document that while firms with higher institutional ownership have a higher probability of being the subject of false M&A rumours, rumoured targets with higher institutional ownership experience lower market reactions.

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“…Chinese local senior governors are all appointed by the central government (Qian et al , 2006). For MNEs, maintaining a healthy relationship with the government and provincial governors is important but challenging (Arnoldi and Muratova, 2018). MNEs should realize the huge impact of local politicians' traits on their internationalization strategies and consider the compatibility of governors' traits and firm strategies.…”

Section: Discussionmentioning

confidence: 99%

“…(4) Governors ' age . Governors' age may affect regional enterprises' strategies (Arnoldi and Muratova, 2018). (5) Tenure .…”

Section: Data Variables and Methodsmentioning

confidence: 99%

Governors' pro-market ideology as institutional enablement of firm internationalization

Zhou

Sun

2021

CCSM

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PurposeExtant literature has indicated that government support is one of the main drivers of international expansion of Chinese multinational enterprises. However, research on the influence of governors on firm internationalization is still limited. Drawing upon the institution-based view, we theorize a novel concept of institutional enablement to illustrate the influence of a governor's pro-market ideology on Chinese firms' internationalization.Design/methodology/approachWe analyze the relationship between a governor's pro-market ideology (consisting of a pro-market political ideology, an overseas educational background and a business background) and firm internationalization with a sample of Chinese public companies during 2014–2017.FindingsWe find a direct and positive effect of a governor's pro-market ideology on firm internationalization. We also find an indirect and positive effect of a governor's pro-market ideology through regional, inward foreign direct investment.Originality/valueTo the best of our knowledge, this paper is the first to investigate an underexplored question of the impact of governors on firm internationalization and to develop a novel concept of institutional enablement, based on discursive institutionalism.

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Unrelated acquisitions in China: The role of political ownership and political connections

Cited by 33 publications

References 61 publications

Political connections and corporate performance: Evidence from Pakistan

Political connections and corporate performance: Evidence from Pakistan

Market reactions for targets of M&A rumours—evidence from China

Governors' pro-market ideology as institutional enablement of firm internationalization

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