The Research On The Relationship Between Institutional Capital Of Home Country And Cross-border M&A Performance Of Chinese Firms

China has seen a new upsurge of cross-border M&A since the financial crisis in 2008. The fact that M&A carried out by Chinese enterprises towards those enterprises in developed countries has been a heated topic. Some scholars hold that institutional incentives of home country make the major motivation of Chinese firms’ overseas M&A, because they are less advantageous in terms of technologies, management and brand. The unique and complicate institutional environment makes cross-border M&A full of “Chinese characteristics”. Instititional environment has great influence on the motivation, location choice, entry mode and integration process of cross-border M&A of Chinese enterprises. When we talk about M&A performance, economic and counting indexes are usually taken to measure shareholder value and wealth effect. Few entrepreneurs and researchers pay attention to whether the cross-border M&A has achieved the strategic goal of acquiring firms and target firms. Does government support and institutional environment improve cross-border M&A performance of Chinese enterprises? The realistic question is the start-point of the paper.The paper introduces “institutional capital” to describe the unique resources that embedded in institutional environment and can bring competitive advantage for enterprises. Under the background of Chinese economic transition and market segmentation, this paper struggles to explore the relationship of institutional capital and cross-border M&A performance. As a resource, institutional capital is influenced both by the learning abilities and external institutional environment. Regulating effects of institutional distance and degree of marketization of location of acquiring enterprise are further studied.Based on the foundation of literature research,four hypotheses are put forward. Follwing normative research method, questionnaire survey is used to investigate original data and the empirical results indicate that:(1) Institutional capital of home country is positively correlated with the performance of cross-border M&A, which means Chinese institutional environment and government support do promote M&A performance of Chinese Enterprises.(2)The regulating effects of learning abilities towards institutional capital and M&A Performance is U curve and there is a threshold for learning abilities.When learning ability exceed certain threshold, institutional capital can prompte M&A Performance significantly.(3) Institutional distance negatively regulates relationship between institutional capital and cross-border M&A performance.(4) Degree of marketization of location of acquiring enterprise negatively regulates the relationship between institutional capital and cross-border M&A performance.The paper enriches the research of cross-border M&A and OLI Paradigm. It studies the home effect of Chinese overseas M&A by introducing “institutiona capital”, which is innovative in research perspective. And it is practical for Chineses enterprises because it points out the mechanism and precondition that institutional capital take effect.