Research On The Impact Of Political Connections On The Performance Of Cross-border M & A Of Listed Companies In China

In recent years,the number and scale of cross-border mergers and acquisitions of listed companies in China have been increasing,ushering in a "wave" of cross-border mergers and acquisitions.Compared with Western developed countries,China’s special political environment and policies will have an impact on the cross-border mergers and acquisitions of listed companies in China,so the relationship between enterprises and the government will have an important impact on cross-border mergers and acquisitions to a certain extent.When an enterprise establishes a certain relationship with the government,it can bring financing convenience to the enterprise and reduce the financing cost of the enterprise,so whether the enterprise can make good use of the advantages of this relationship and what kind of impact it will have on the cross-border mergers and acquisitions of the enterprise is a question worth thinking about and exploring in depth.Based on the analysis of the existing research literature,this paper selects the theory of social capital relations,information asymmetry,principal-agent theory,rent-seeking theory,and financing constraint theory as the theoretical basis,and then puts forward corresponding hypotheses.Taking the cross-border M&A events of listed companies in China from 2014 to 2019 as a research sample,this paper calculates the cross-border M&A performance of listed companies through the principal component analysis method;first analyzes the impact of political connections on the performance of cross-border M&A,and analyzes the financing constraints faced by companies,and explores whether political ties will affect the performance of cross-border M&A through this channel by alleviating financing constraints;the experience of the host country is conducive to establishing trust between the parent enterprise and the host country enterprise.Therefore,this paper incorporates the regulatory variable of host country experience to observe its moderating role in the relationship between political connections and cross-border M&A performance;then,in order to further analyze the impact of political connections on the performance of cross-border M&A,the overall sample is divided into state-owned enterprise groups and private enterprise groups,and the differences in the impact of political connections on cross-border M&A performance under different ownership properties are discussed.Through the empirical research in this paper,it is found that:(1)political connections has a significant negative impact on the performance of cross-border M&A;(2)political connections can significantly alleviate the financing constraints faced by enterprises,and financing constraints play an intermediary role in the impact of political association on cross-border M&A performance;(3)host country experience plays a regulatory role in the impact of political connections on cross-border M&A performance,and host country experience can weaken the negative impact of political connections on cross-border M&A performance.(4)Through group analysis,it is found that the political connections of state-owned enterprise groups has a greater impact on the performance of cross-border mergers and acquisitions than that of private enterprises.This paper argues that state-owned enterprises are led by the government,and the host country enterprises have a deeper "political imprint" on Chinese listed companies,which is more likely to cause political resistance and cultural misunderstanding of the host country enterprises,thus having more negative impact on the performance of cross-border mergers and acquisitions.Based on the research conclusions,this paper puts forward the following policy recommendations: from a micro perspective,enterprises should first correctly understand and rationally use the social relationship capital of political affiliation to grasp more resources and conveniences;second,enterprises should improve the level of corporate governance,and enterprises should reduce the problem of entrustment and agency caused by the information asymmetry between management and shareholders,shareholders and creditors as much as possible;finally,politically related enterprises,especially state-owned enterprises,should effectively improve their impression management,with the goal of continuously improving the performance of cross-border mergers and acquisitions.From a macro point of view,the government should build a market-led financing environment,and should establish a healthy and orderly capital market environment,so as to optimize the allocation and supply of market funds and improve the performance of cross-border mergers and acquisitions.