Cross-border mergers and acquisitions from emerging-market nations: evidence from Chinese acquirers

cross-border mergers and acquisitions;emerging-markets;productivity;government;corporate governance

Guo, Wenxin

关键词: cross-border mergers and acquisitions;    emerging-markets;    productivity;    government;    corporate governance;   

Others  :  https://www.ideals.illinois.edu/bitstream/handle/2142/50385/Wenxin_Guo.pdf?sequence=1&isAllowed=y

美国|英语

来源: The Illinois Digital Environment for Access to Learning and Scholarship

【 摘 要 】

This dissertation focuses on the phenomenon of outward cross-border mergers and acquisitions (M&As) by emerging-market multinationals, using China as the focus of investigation. In 1999, the Chinese government initiated the ‘Going global’ policy to promote Chinese investments abroad. The intended rationale behind the policy was to support the seeking of strategic assets (e.g., technology, brand, and management expertise, etc.) located abroad and to gain global knowledge and experience—all in order to compete more effectively against foreign rivals in both domestic and global markets, and to ultimately enhance the development and welfare of China. Accordingly, this study examines whether the Chinese indigenous firms generally experience enhanced productivity in their domestic operations in the years subsequent to the cross-border M&A activities, the role of government involved, and the influence of the transitioning corporate governance in domestic productivity upgrading via cross-border M&As.The first essay addresses the important role played by the Chinese government when Chinese acquirers purchase foreign targets. In particular, I submit that state-ownership is a key factor in explaining the high acquisition premiums generally paid by Chinese firms engaging in outward cross-border merger activities. Moreover, state-owned MNEs pay even higher acquisition premiums when they act as parents and employ a privately-owned subsidiary to complete the cross-border M&A.The second essay investigates whether Chinese acquirers upgrade their home productivity via cross-border M&A activities. Building on the literature of asset exploration, absorptive capacity, and knowledge transfer within multinational firms, I posit that the strategic assets that Chinese acquirers obtain from foreign targets enable them to learn and increase post-M&A productivity in their home operations. Empirical results confirm that on average Chinese acquirers are able to enhance domestic productivity subsequent to cross-border M&A activities. This enhanced productivity stems from the acquisition of developed-nation targets rather than developing-nation targets. Furthermore, cross-border M&As represent a superior vehicle to engage in learning as compared to international alliances.The third essay examines the firm-level heterogeneity in corporate governance which is conducive to firms being able to learn from their cross-border activities. Empirical findings suggest that government ownership decreases the effect of cross-border M&As on subsequent domestic productivity as compared to non-government ownership, which indicates that state-owned enterprises are indeed less efficient in terms of learning. Top management team equity ownership enhances acquirer’s domestic productivity via cross-border M&A activities, whereas pay does not. It implies that stock rewards are more efficient than cash rewards in incentivizing managers to align their interests with the firm and thus alleviating the agency problem.