The Influence Of Social Trust On Cross-border Mergers And Acquisitions

M&A is considered as an important way for enterprises to seek development.As the trend of international economic integration and globalization deepens,the strength of Chinese enterprises keeps increasing.Cross-border M&A has become an important strategy for Chinese enterprises to optimize their resource allocation and accelerate their expansion and upgrading in recent years.In 2016,the amount of their cross-border M&As reached a historical peak,with a total of US $135.33 billion throughout the year.Based on the theory of social embeddedness,enterprises are always influenced by the social relationship structure they embed.As an important part of social capital,social trust has a profound impact on the decision-making and management of enterprises.Cross-border M&A,as an important strategic decision towards international market,this paper attempts to explore the impact of social trust on it.Using a sample of 1,210 cross-border M&As conducted by A-share listed companies from 2003 to 2018,this paper attempts to find the influence of social trust on M&A size,acquisition percentage and short-term M&A performance.Innovatively from perspectives of both acquirer and target.First,through an OLS regression,M&A size is found to be positively influenced by both the trust of acquirer and target.Second,with an increase in the target social trust,the probability of acquiring all stakes of target enterprise declines.Finally,short-term M&A performance is proved to be positively correlated with trust of acquirer.And this impact is more obvious in local SOEs group.The findings of this paper can be theoretical foundation for government to strengthen the construction of social culture and improves the soft environment of investment.At the same time,it enriches the literature of informal system.