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The emergence and performance of the Chinese merger market and the impact of partner location

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journal contribution
posted on 2017-10-12, 12:27 authored by Wilfred Dolfsma, Killian J. McCarthy
Chinese acquirers spent $38 million on mergers and acquisitions in 1990, and $666.1 billion on mergers and acquisitions in 2016. As the Chinese merger market has grown, so too has the literature on its performance. Little is known, however, with whom the Chinese can best do business. We aim to fill this gap. We suggest that because the liabilities of ‘distance’ ‘foreignness’ and ‘outsideness’ complicate acquisition performance, targets in countries and regions which add fewer of these liabilities will outperform those that add more. We test this using a sample of 19,766 large (>$10m) acquisitions (Jan 1990-Aug 2017), and a sub-sample of 1,542 acquisition for which we could calculate performance. We then plot the overseas expansion of Chinese acquirers, and compare the performance of Chinese acquisitions, within the Greater China region, within the Confucian cultural sphere, and between Asian and the West. In each case, we predict that increasing cultural distance decreases performance. Then, because the Continental European governance system is institutionally more familiar to the Chinese system than it is to the Anglo-Saxon system, we consider the Chinese experience in each of these two systems. Our results largely support our hypotheses, but we also point to the limits of the generalizability of existing literature in understanding the Chinese market.

History

School

  • Loughborough University London

Published in

Journal of Chinese Economic and Business Studies

Citation

DOLFSMA, W. and MCCARTHY, K.J., 2017. The emergence and performance of the Chinese merger market and the impact of partner location. Journal of Chinese Economic and Business Studies, 16 (1), pp.39-58.

Publisher

© the Chinese Economic Association. Published by Taylor & Francis

Version

  • AM (Accepted Manuscript)

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Acceptance date

2017-09-30

Publication date

2017

Notes

This is an Accepted Manuscript of an article published by Taylor & Francis in Journal of Chinese Economic and Business Studies on 08 Dec 2017 available online: https://doi.org/10.1080/14765284.2017.1410377

ISSN

1476-5284

eISSN

1476-5292

Language

  • en

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