Research On The Influence Of Institutional Distance On The Performance Of Chinese Enterprises' Cross-border Mergers And Acquisitions

In order to respond to the call of “go globally”,Chinese companies increasingly use overseas cross-border M&A activities to open up overseas markets and enhance their international competitiveness.In 2016,the total transaction volume and transaction amount of cross-border mergers and acquisitions by Chinese mainland companies showed an explosive growth,setting a new record.Some examples of cross-border mergers and acquisitions,such as Midea acquires German KUKA and Japan Toshiba appliance business and Qingdao Haier's purchase of GE appliances,have caused constant concern and hot discussion.However,not all Chinese companies have successfully reached M&A transactions with target companies,and some companies have even caused deterioration in their operating conditions after the implementation of cross-border mergers and acquisitions.Researching the factors that influence the success of Chinese companies' cross-border mergers and acquisitions and their performance after mergers and acquisitions has also become a research hotspot for scholars.The institutional distance between the two countries is one of the important concerns.Based on a Chinese context with a unique political and cultural background,this article focuses on cross-border mergers and acquisitions by Chinese companies and integrates perspectives such as “institutions theory,” “organizational learning theory,” and “political connections.” The factors affecting the performance of Chinese companies' cross-border mergers and acquisitions are examined in terms of institutional distance between home countries and host countries,cross-border M&A experience,and political connections.Exploring the following three questions:(1)Whether the institutional distance will affect the performance of Chinese companies' cross-border mergers and acquisitions;(2)Does cross-border M&A experience have a regulatory effect on the relationship between institutional distance and M&A performance?(3)Does political connections have a regulatory effect on the relationship between institutional distance and M&A performance?After summarizing and analyzing existing domestic and foreign research literatures,this paper proposes research hypotheses,constructs conceptual models,and determines research methods for exploring the relationship between institutional distance and cross-border M&A performance.This article takes the Chinese companies listed on the A-shares of the Shanghai and Shenzhen Stock Exchanges as the research objects in 2016,collects and sorts out the relevant data of 163 companies implementing cross-border M&A activities,and uses statistical software such as EXCEL and SPSS to analyze the data obtained in this study.The empirical test of the research hypothesis and conceptual model proposed in this study yielded the following empirical test results:(1)The institutional distance between China and the host country has a negative impact on cross-border M&A performance.(2)Enterprises with cross-border M&A experience will weaken the negative impact of institutional distance on cross-border M&A performance.(3)Enterprises with political connections will weaken the negative impact of institutional distance on cross-border M&A performance.