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Title: The emergence and performance of the Chinese merger market and the impact of partner location
Authors: Dolfsma, Wilfred
McCarthy, Killian J.
Keywords: Mergers and acquisitions
Corporate governance
Confucian system
Anglo-Saxon system
Continental European system
Issue Date: 2017
Publisher: © the Chinese Economic Association. Published by Taylor & Francis
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.
Abstract: 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.
Description: This paper is closed access until 08/06/2019.
Version: Accepted for publication
DOI: 10.1080/14765284.2017.1410377
URI: https://dspace.lboro.ac.uk/2134/26930
Publisher Link: https://doi.org/10.1080/14765284.2017.1410377
ISSN: 1476-5284
Appears in Collections:Closed Access (Loughborough University London)

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