A Study On The Effects Of Geographical Distance On Acquisition Performance

Mature conclusions have been yielded on the studies of the geography of M,&A abroad in the past ten years.However,there is still very little consideration of geographical factors at home.Information asymmetry is the most considered factor in the related literature at home and abroad.According to the theory of information asymmetry,the geographical distance between the two parties will increase the information asymmetry.The distant competitor need to spend more cost to collect the information and to realize the supervision and integration of the target.And for those soft resources that are hard to spread,distance also increases the difficulty of learning from each other.Therefore,many scholars believe that information asymmetry greatly increases the synergy costs and reduces the benefits of M&A,which also explains the phenomenon of "local preference".In addition,although the mainstream literature believes that similarities between the two parties of M&A can help promote synergy effect,there are still a few scholars think that differences are the key to the success of mergers and acquisitions.Two different resources complement each other and create unique values,which is the theory of differential complementarity.Geographic distance will bring a lot of differences,such as:differences in the concept of knowledge and management experience,differences in political and economic system,differences in market,differences in the allocation of resources,etc.These differences provide the possibility to realize the complementary effect,and also provide the possibility to increase the synergistic benefit to improve the M&A performance.On the basis of this,taking the M&A activities in which the listed A-share companies are acquirers in 2004-2015 years as the research objects,this paper studies which influence factor plays a dominant role in the relationship between the geographical distance and the short-term market performance of M&A in the domestic a-share market.The conclusion is as follow:when the distance is close,the distance is positively correlated with the market reaction and the influence to the performance of M&A of complementary effect of difference is higher than the influence of information asymmetry;but,when far away,the distance is negatively correlated with the market reaction and the influence of information asymmetry is higher;in addition,government intervention undermines the relationship between geographical distance and the performance of M&A.This paper takes into account the market segmentation phenomenon,the imbalance of resource allocation and the difference of political and economic syste:m in China's economic reality,which means some practical significance.In addition,it also enriches information asymmetry theory and differential complementary theory to a certain extent,and provides a new perspective for future research,which means some theoretical value.