A Research On The Institutional Quality,Contract Value And The Success Of Chinese Overseas Acquisitions

With the transformation and upgrading of Chinese economy,in addition to the improvement of Chinese enterprises' international competitiveness,more and more Chinese companies are implementing overseas acquisitions.Nevertheless,beneath the enthusiasm for “Going out” lies the increasing complex M&A transactions,which has aroused the discussion of influencing factors of M&A in academia.Many researchers take the perspective of institutional quality to analyze the influencing factors of M&A.Yet institutional influences on different industries in the field of M&A are seldom mentioned.This paper investigates the influence mechanism of institutional quality on Chinese overseas acquisitions by introducing contract value into the study of M&As.Using panel data of Chinese overseas M&As during the year of 2001 to 2015 from Thomson Reuters database,and setting up a probit model,the empirical results show the following findings.First,a good institutional environment increases the possibility of a success acquisition.Second,high contract value,which means intensive relationshipspecific investments,increases the possibility of an M&A failure.The third finding is also the innovation of this paper.That is,in those regions with high institutional quality,the powerful contract enforcement would consolidate the degree of compactness between enterprises,increasing the contract value,and thus increase the Pre-M&A asymmetric information and increase the difficulties in negotiations,which results in a lower success rate.The innovative contribution of this paper is that it extends the institutional perspective to an industry level.The conclusion of this paper is also helpful for Chinese enterprises' international strategy and government policy-making.