Research On The Relationship Between Overseas Returnees And Cross-border M&A Of Chinese Enterprises

Cross-border M&A is not only an important means for China to restructure its industrial structure and promote high-quality economic development,but also an inevitable choice for enterprises to acquire strategic resources and strengthen economies of scale and synergies.In the context of economic globalization,with the implementation and promotion of "going global" and "One Belt And One Road" strategies,the Chinese government actively promotes local enterprises to conduct cross-border mergers and acquisitions,and the number and amount of cross-border mergers and acquisitions continue to grow.According to data from Wind,the annual transaction value of Chinese enterprises' cross-border mergers and acquisitions has been above $30 billion in the past decade,and cross-border mergers and acquisitions have remained active.However,under the intense enthusiasm of cross-border M&A,the high premium rate and operating loss have attracted extensive attention from the academic and practical circles.Therefore,while using cross-border M&A to "go out",how to improve the quality of cross-border M&A to achieve "go far,go smoothly and stand firm" and promote the transformation and upgrading and leapfrog development of Chinese enterprises has become the practical and theoretical focus in the field of cross-border M&A research.Center on the topic of "how to improve the quality of cross-border M&A",the existing researches mainly answer the question from three perspectives: country level,industry level and enterprise level.Scholars pay more attention to the objective factors of macro level and micro level,although the system,political relations,cultural difference,geographical distance,industry characteristics and other factors will affect the enterprise of cross-border mergers and acquisitions,but these factors to the enterprise is "established" constraints,enterprise is more passive acceptance,and micro factors discussed is the same to help to find out in the face of the enterprise m&a environment shows the crux of the travel behavior alienation.At the micro enterprise level,there are many factors affecting cross-border M&A,but the enterprise management is particularly important.Because managers play an important role before and after cross-border M&A,cross-border M&A decisions depend on corporate management's governance behavior.As the core of corporate governance and an important entity of enterprise power structure,the board of directors is the decision-making and implementation control department of enterprise merger and acquisition strategy.Its characteristics and behavior are closely related to cross-border merger and acquisition.Whether it can effectively play its role will have a direct impact on cross-border merger and acquisition of enterprises.The personal characteristics and abilities of directors determine whether they can efficiently perform their duties.Chinese governments at all levels have also introduced and provided a series of preferential policies and convenient conditions to attract talents and talents while accelerating the "going global" of enterprises.More and more international talents with overseas returnees have entered the board of directors.The overseas study or work experience of returnees often enables them to have extensive overseas relationship network,reasonable knowledge structure and rich transnational and cross-cultural management skills and other resources and ability advantages.These advantages have promoted the returnees to gradually grow into the main force of regional economic development and scientific and technological progress.Specific to the micro level,the above advantages as a precious resource will have an impact on the behavior of enterprises.Existing studies have confirmed that directors' background of overseas returnees can promote the effective functioning of the board of directors and have an impact on the performance,innovation,audit,strategy and other aspects of enterprises.However,as the decision-making and implementation supervision department of cross-border M&A,there has been no in-depth and systematic research on whether and how the presence of directors with returnees can affect cross-border M&A.Based on this,this paper attempts to discuss whether and how directors with background of overseas returnees affect cross-border M&A from the perspective of:In different stages of cross-border mergers and acquisitions,whether and how do returnees' background directors influence the cross-border mergers and acquisitions of enterprises? Is the influence of returnees' directors on cross-border M&A subject to specific decision-making situations? Although a series of situational factors have been identified in previous studies on the relationship between returnees' background directors and enterprises' internationalization decisions(Laufs et al.,2016;Li Jing et al.,2017).However,most of these research objects are companies from developed countries and regions in Europe and the United States.At present,from the perspective of China's capital market and the governance practice of listed companies,there is insufficient research on the circumstances under which overseas directors will have a strong,weak or even no influence on cross-border M&A.In addition,different overseas experiences and board positions give directors different "voice" abilities and influences.Only with direct experience and substantive discourse power can directors have the ability and motivation to make decisions that are more conducive to the development of the company.Then,does the influence of returnees' background directors on cross-border M&A vary according to the types of overseas experience and positions they hold?Taking M&A events of Chinese A-share listed companies from 2009 to 2017 as samples,this paper systematically investigates the influence of returnees' directors on cross-border M&A initiation before M&A transaction,cross-border M&A premium in M&A transaction and M&A performance after M&A transaction,and clarifies the mechanism of the influence of returnees' directors on cross-border M&A.The research findings of this paper are:(1)The existence of directors with overseas background makes enterprises more inclined to initiate cross-border mergers and acquisitions.Returnees background directors can rely on its own accumulated advantage of unique resources and capabilities,improve enterprise's ability to cross-border mergers and acquisitions,reduce the enterprise the uncertainty and fuzziness associated with cross-border mergers and acquisitions,help enterprise to identify the different countries or regions with lower cost of acquisitions,the enhancement enterprise launched cross-border m&a motivation to get potential profits.Moreover,directors with returnees can effectively supervise management and substantially reduce the adverse impact of management opportunism on cross-border M&A.Therefore,when enterprises intend to conduct mergers and acquisitions,returnees' background directors promote enterprises to be more inclined to initiate cross-border mergers and acquisitions.(2)Returnees with background directors can help reduce the premium of cross-border M&A.In the process of enterprise cross-border m&a pricing,returnees background director can help Lord and enterprises to better carry out due diligence,improve the accuracy of the target enterprise value evaluation,and reduce the risk in the process of cross-border m&a pricing,optimization of cross-border m&a pricing negotiation strategies,so as to improve the efficiency of enterprise cross-border m&a pricing,reduce the cross-border m&a premium payment.(3)Directors with returnees can improve the performance of cross-border M&A.Returnees background directors as an important part of corporate governance structure,in cross-border m&a integration for the enterprise to provide additional information channels and a new perspective to solve the problem at the same time,also can carry on the effective supervision on management,substantially reducing the management in the process of cross-border m&a integration of the low efficiency of conscious or unconscious behavior,promote the integration of enterprise after the completion of the cross-border mergers and acquisitions,cross-border m&a performance as the result of ascension.The results of path analysis show that the improving effect of returnees' background directors on the performance of cross-border M&A has a partial path of integration ability.(4)The regional differences,the degree of market competition and the nature of equity of the co-owner can adjust the relationship between the returnees' background directors and the cross-border M&A behavior(initiation of cross-border M&A,cross-border M&A premium and cross-border M&A performance).According to the test of different decision-making scenarios,it is found that the directors of enterprises in coastal areas,enterprises facing fierce competition and state-owned enterprises with overseas returnees have a more significant promoting effect on the initiation of cross-border M&A.The inhibiting effect of returnees' directors on cross-border M&A premium is more obvious in coastal enterprises,enterprises facing greater competition in domestic market and state-owned enterprises.The incremental contribution of directors with overseas returnees to the improvement of cross-border M&A performance is greater in enterprises in coastal areas,enterprises facing greater competition in the domestic market and state-owned enterprises.(5)The influence of returnees' background directors on cross-border M&A(cross-border M&A initiation,cross-border M&A premium and cross-border M&A performance)varies with the types of overseas experience and positions.According to the classification test of directors with overseas background,the influence of overseas working experience of directors with overseas background on cross-border M&A is more significant than that of overseas study experience.Compared with returnees in ordinary positions,returnees in key positions have greater marginal utility on cross-border M&A initiation and performance.Compared with executive directors with background of overseas returnees,non-executive directors and independent directors with background of overseas returnees have a more significant inhibiting effect on cross-border M&A premium.To sum up,based on the theoretical analysis and empirical test of the influence of directors from the background of returnees on cross-border M&A,the main policy recommendations proposed in this paper are as follows: First,from the perspective of macro policy makers,policy makers should pay attention to the social capital accumulation of returnees;Strengthen the optimization and implementation of the policy system for overseas high-level talents;Improve the current training system for overseas students;Strengthen the system construction in different regions of our country;Improve the system concerning the board of directors.Secondly,from the perspective of enterprises,enterprises should not only introduce directors from overseas backgrounds,strengthen the construction of the board of directors,and improve the current governance mechanism of the board of directors.Risk assessment and prevention should be strengthened to further optimize cross-border mergers and acquisitions.Finally,for investors in the capital market,when considering investment objects,they can consider whether there are directors with overseas background in the board of directors of the master and subsidiary companies as one of the criteria,so as to make more reasonable investment decisions.