| Merger and acquisiton which is a quick implementation of optimizing resource alloceation plays a more and more important role in recent economic activities. The strategy of "Going out" has brought rapid development of Chinese enterprises’ internationalization while the final amount of completed transaction is little. Chinese government has further clarified that China should cultivate a number of world-class multinational corporations in18th CPC National Congress. In this sense, state-owned enterprise as the main part of Chinese enconomy is the focus in devopment process.Therefore it is necessary to find out the reason why our state-owned enterprise have got such low success rate in cross-border M&A.China’s economy transition is from planned economic system, state-owned enterprise has big differencs in operation, management and other ways compared with westen world-class enterprises, therefore the institutional environment factors are considered to play an important role in corss-border M&A. Our enterprise has gained a lot from the exploration of failures from cross-border M&As. As a result, our enterprise’ M&A becomes more and more mature and normalized in payment and negotiation. Not only different counties have significantly different institutional environment but also other countries’institutional enviorment is different from China’s, therefore the exploration to find the impact of host country’s institutional environment in China’s state-owned enterprises’cross-border M&A is important in both academeic value and actual value.The theoritical model of how host country’s institutional environment affects in cross-border M&A transaction for China’s state-owned enterprises is based on several theoretical knowledge including merger and acquisition theory, international economics, new institutional economics, sociology. In this article, first it is a multi-case study which analyzed the China’s industry leader enterprises’cross-border M&A including SINOPEC, CSOL, Haier Group, China Minmetals Corporation; second it is an empirical analysis about246cross-border M&A cases from January,2002to June,2012. The main conclusions are as follows:(1) the higher political system and industry protection level are, the lower cross-border M&A success rate is;(2) the higher host country’s economic freedom is, the higher cross-border M&A success rate is;(3) the bigger culture differencs, the cross-border M&A success rate is; (4) economic freedom and industrial protection are mandatory institutional constraints which are not influenced by our enterprises’ specific advantages;(5) China’s enterprises’specific advantages can weaken negative constraints of host country’s political institution;(6) The attention fo mass and media will be attacted while the target enterprise’s situation has changed a lot which leads the merger becomes more difficult.This research has main research improvements and innovations as follows:1. Scholar research is always limited in one dimension of merger performances such as finance performance, payment, competition advantages, but not mention on external environment factors in Chinese enterprises’ M&A transaction. This research is based on world economics, new institution economics, and strategic environment analysis in theory and Chinese state-owned enterprises’ acutual situation. The theory model includes "host country’s institutional environment factors, China’s state-owned enterprises’specific ability and target company’s characters". This model is able to depict the impact of institional environment of China’s state-owned enterprises effectively in reality so that it has certain contribution in system and depth and also provides some reference and guidance for development and deployment in internationalization strategy.2. Previous studies of cross-border M&A are based on the developed country, this article presents comparisions between China-United States and China-Japan to show that China’s developing transaction is totally different and further the particularity of China’s state-owned enterprises should be attracted attention to. In this article, host country’s informal institutional factor and China’s state-owned enterprises’specific advantage in analysis which effectively expands the perspect of cross-border M&A research has been researched.3. Comprehensive measures are based on ICRG, GCI and EFI since each evaluation index system is limited in some dimension. In this article host country’s formal institutional environment factor has been reformed to political, economic and industrial proection, the informal instiontional environment factor has also been incorproatied. The research becomes much more objective and complete after made up traditional single dimension of formal institional enviroment factors.4. Previous research about the motivation of cross-border M&A mostly focused on diversified merger and related merger, but the specific differences in deeper reaearch has not been mentioned. In this article, the multi-case study shows that motivation affects little to the final result; the more important factor is merger’s developing strategy which provides careful deployment, target screening, easy examination and approval.5. According to the final conclusion, innovation are as follows:First, host country’s formal institutional environment factor, informal institutional environment factor, the specific advantage of our stated-owned enterprises can affect on the final result of cross-border M&A. Secondly, economics freedom and industry protection play are systemic risk which can not be improved by other factor in M&A transactions. Thirdly, informal institutional environment factor and political factor can be avoided by our state-owned enterprises’ specifc advantage. Finnaly, the target enterprise in trouble is a double-edged sword; it provides a nice opportunity to merger while it also attracts mass and media’s attention. Generlly speaking, our state-owned enterprises must improve their abilities to increase the success rate of cross-boder M&A.
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