Financial Opening And Digital Mergers And Acquisitions

Since the 20 th National Congress of the CPC,China has continued to prudently promote the opening-up of the financial sector,continuously relaxing the access threshold for foreign financial institutions,and deepening the opening-up of the capital account.Under the background of prudently promoting financial opening in China,digital economy develops rapidly from the bud,international investment activities represented by digital transnational mergers and acquisitions show a rapid growth trend,and China’s digital transnational mergers and acquisitions(DM&A)are also in the ascendancy.However,at present,the uncertainty of international economic conditions makes it difficult for Chinese enterprises to participate in international competition through DM&A.In this situation,it is urgent to have a well-functioning financial system inside our country to support the enterprise transnational mergers and acquisitions activities.Therefore,this paper focuses on how to better play the role of financial services to the real economy and promote the DM&A of Chinese enterprises.This paper assumes that the relationship between financial opening and DM&A is inverted U-shape which means it can improve the advantages if DM&A,but once financial opening exceeds a certain critical value,it will have a negative impact on DM&A.Next,this paper analyzes the mechanism between financial opening and DM&A.The lifting effect of financial opening on DM&A is more obvious in the enterprises with high degree of financing constraints;secondly,the improvement of institutional quality provides motivations and advantages for DM&A.On the basis of theoretical analysis,this paper use the data of China’s DM&A from2006 to 2020,and binomial regression model has been applied to test the relationship between financial openness and DM&A,providing support for the inverted "U" shaped relationship between them.This conclusion is still valid after a series of robustness tests.Then,the mechanism tests show that financial opening can improve the regional institutional quality and thus contribute to DM&A and financing constraints have a positive moderating effect on the relationship between them.We also find that non-state-owned enterprises are more sensitive to the transmission mechanism of DM&A promoted by financial opening,as well as enterprises in eastern China.Finally,this paper provides clues to understand the mechanism between financial openness and DM&A,and provides relevant enlightenment to better drive the DM&A based on national conditions.