The Relationship Among Formal Institution,Market Potentialand The Location Choice Of Cross-border M&A

As the “going out” pace of Chinese firms has been accelerating,the cross-border merger and acquisition of Chinese firms has become a common concern in both theory and practice field.Zhejiang and Guangdong,as the leaders of China's economic reform and development,play an important role in the cross-border M & A in China.However,there are some differences in the cross-border M & A location choice between the firms in two provinces.Zhejiang and Guangdong are located in the two most active regions in China: the Pearl River Delta and the Yangtze River Delta.But the majority of Zhejiang firms' develop from spontaneous adjustment to government promotion.The high speed development of Guangdong firms is mainly affected by the national level economic system reform and the radiation effect of early Hong Kong and Macao,they follow the road both of gradual separation of government with firms and the development of foreign trade.Obviously,these differences have a significant impact on the cross-border M & A of firms in the two provinces.With the data of completed cross-border M&A of Zhejiang and Guangdong firms from January 2001 to December 2015 as samples,analysis based on stochastic Poisson regression model,then discuss the mechanism issue that the host country'sformal institution have different influence on the location choice of cross-border M &A of the two provincial firms.This paper analyzes the mechanism of the difference between the host country's formal institution and the location choice of the two provincial firms,according to both control and economic institution aspects by using with market potential as regulatory role.The research found that control institution factors have significant negative influence on the firms' location selection of cross-border M & A in both Zhejiang Province and Guangdong Province.Two provincial firms are inclined to the countries or regions of poor control institution to carry out cross-border M & A.Economic institution have significant positive influence on the firms' location selection of cross-border M & A in Zhejiang,firms tend to carry out cross-border M & A on the countries or regions of better economic institution.In addition,the market potential of the host country can be a positive regulatory to the relationship between control institution and cross-border M & A location selection;and be a positive regulatory to the relationship between regulation institution and cross-border M & A location selection.Finally for subdivision institutional factors,Government Effectiveness,Control of Corruption is negative to cross-border M & A location selection in tow provinces.Overall,the results of this paper have positive theoretical significance and good practical implications for the promotion of cross-border M & A in China.On one hand,the results of this paper enrich the theoretical connotation of cross-border M & A of Chinese firms through the analysis of the two provinces of Zhejiang and Guangdong.On the other hand,firms in different regions of China need to develop a targeted merger strategy and select the appropriate M & A target based on the actual development of local firms.