The Impact Of Host Country's Country Risk On Performance Of Cross-border M&A

With the acceleration of globalization and the improvement of the status of Chinese enterprises in the international market,transnational mergers and acquisitions of Chinese enterprises have become the focus of academic and business circles.However,cross-border mergers and acquisitions are affected by many factors,among which national risk is one of them.In the research on the impact of national risk on cross-border M&A,most of the literature is at the stage of case analysis,and the literature of quantitative research is relatively scarce,and the sample size is small.In order to study the impact of national risk on the performance of cross-border M&A more systematically,this paper makes a comprehensive analysis from four aspects: national comprehensive risk and national risk,political risk,economic risk and financial risk.Firstly,this paper synthesizes agency theory,market power theory,free cash flow theory and efficiency theory to analyze the theoretical basis;secondly,the impact mechanism of the study is analyzed from the economic,financial and political aspects;finally,this paper uses the national risk index of 2008-2016 at the national level and the performance data of transnational mergers and acquisitions to conduct empirical research on the problem.Research.This paper uses CSMAR database,BvD-ZEPHRY merger and acquisition database and Wind database to select samples,and uses STATA.13 for analysis.Through empirical research,this paper draws the conclusion that when the comprehensive risk of the target country is low,the performance of transnational merger and acquisition will be better;the relationship between economic risk,financial risk and the performance of transnational merger and acquisition is consistent with the comprehensive risk of the country.That is,the higher the economic and financial risks of the target country,the worse the performance of cross-border M&A.However,the study shows that political risk and cross-border M&A performance have not passed the significant test.The reasons may be as follows: firstly,compared with financial risk and economic risk,political risk directly affects the occurrence of mergers and acquisitions.Many mergers and acquisitions terminate transactions because of political risk,so the impact of political risk on performance is not significant;secondly,political risk assessment indicators are different from economic and financial evaluation indicators,mainly subjective.The third is that the political risk assessment of PRS Group is based on the perspective of Western countries,and there are some countries with low scores of political risk in the world,but they have long-term cooperative relations with China and have close cooperation with China,which are not particularly high political risk for China;the fourth is that the political risk of PRS Group is higher than that of China.Economic and financial risks are more likely to be affected by the adjustment of diplomatic relations,thus affecting the empirical results.Finally,based on the empirical results of the previous part,this paper puts forward some pertinent suggestions on some problems arising from crossborder M&A in China.