The Influence Of Host State Business Environment On The Results Of Cross Border Mergers And Acquisitions

Since the report of the 19 th National Congress of the Communist Party of China put forward the strategic deployment of attaching equal importance to both introduction and going global,a large number of Chinese enterprises have expanded channels,improved innovation,built brands and strengthened the core competence of Chinese enterprises in competition through cross-border mergers and acquisitions and other international activities.The convening of the 20 th National Congress also further proposed to create a first-class business environment and deeply participate in the division and cooperation of global industries.However,with the rapid development of cross-border M&A,there are many obstacles,among which the mutual adaptation between the home country enterprises and the host country environment has become an important link.The transnational M&A of enterprises will inevitably face the disadvantages of outsiders and many uncertainties,which will generate new external transaction costs.The existing studies have mostly considered from the perspective of the environmental constraints of the host country and the enterprise’s own conditions,and only analyzed the impact of the business environment or institutional environment on the success or failure of cross-border mergers and acquisitions,or only analyzed the impact of cross-border mergers and acquisitions from the enterprise’s own attributes such as corporate social responsibility.Such studies are generally based on stakeholder theory,corporate reputation theory,corporate cost theory and other theories,but most of them only focus on legitimacy issues,such as the trust or recognition of various stakeholders,and whether they can adapt to the new environment.Although the disadvantages of outsiders,external transaction costs and uncertainties were mentioned,the interaction effect of internal and external factors of the enterprise was not further investigated.Only a few studies focused on the relationship between corporate social responsibility and the local business environment.Therefore,based on the analysis of existing literature,this paper uses the data of Chinese A-share companies in Shanghai and Shenzhen from 2010 to 2020,takes the success of cross-border M&As initiated by Chinese listed companies as the explanatory variable,and business environment,corporate social responsibility and their interaction as the explanatory variable,so as to explore the effect of corporate social responsibility in the business environment on the success of cross-border M&As;And further subdivide the differences between the responsibilities of shareholders’ stakeholders and those of non shareholders’ stakeholders in corporate social responsibility.In this paper,Logistic method is used for empirical analysis,and variable replacement and probit regression are used in robustness test.The empirical analysis of this paper obtains the following research results: First,the optimization of the business environment or the improvement of corporate social responsibility has a positive impact on the success of cross-border mergers and acquisitions.When the business environment cannot be used as a favorable factor,corporate social responsibility can make up for certain adverse effects,showing a certain degree of substitution.Second,the performance of corporate shareholder stakeholder responsibilities has a positive impact on the success of cross-border M&A,and the positive impact of business environment on the success of cross-border M&A is enhanced with the improvement of shareholder stakeholder responsibilities.The higher the level of social responsibility of enterprises with higher requirements for shareholders’ interest related responsibilities,the higher the level of social responsibility,and the lower the uncertainty and cost due to the pressure of performance expectations when facing adverse institutional difficulties.More likely to give up the transaction;In the case of a better business environment,on the contrary,the decision-maker will be inclined to complete the M&A transaction.In terms of the impact on the success or failure of cross-border M&A,the ability of shareholders to fulfill their interest related responsibilities has a magnifying effect on the business environment,and the two are complementary.Third,the enhancement of the ability of non shareholder stakeholders to fulfill their responsibilities has a positive impact on the success of cross-border mergers and acquisitions.The substitution of corporate social responsibility for business environment mainly comes from the responsibility of non shareholder stakeholders.When an enterprise announces cross-border M&A activities,it can obtain more support from external stakeholders,which is conducive to the positive evaluation of the transaction by both parties,thus reducing or even eliminating the adverse factors caused by the business environment.Based on the research results of this paper,the corresponding policy recommendations are given: First,for going global,both internal and external training is required.For domestic enterprises,it can be in line with international standards.With reference to the GRI standard issued by the Global Reporting Initiative in 2016 or the ISO26000 guide officially issued by the International Organization for Standardization in 2010,the regulatory authority will provide disclosure guidance to listed enterprises,establish the image of Chinese enterprises,establish a good reputation for China’s trans national corporate social responsibility,produce a halo effect,and also facilitate the performance of the responsibilities of non shareholder stakeholders;For the responsibilities of shareholders’ stakeholders,it is necessary to strengthen the implementation of laws and regulations on investor protection and the guidance of corporate governance,so as to help enterprises promote cross-border mergers and acquisitions.The government can take the lead to establish a clearer and specific list or report of business environment cases to provide enterprises with clearer and more reliable information on external investment and M&A.This can not only help enterprises broaden their information channels for foreign M&A,but also help enterprises to clear up obstacles when making location choices.Second,for the introduction,we need to exchange perspectives.From the perspective of cross-border mergers and acquisitions by foreign investors in China,while focusing on the construction and improvement of the business environment,China can consider establishing a screening mechanism for the ability of foreign investment enterprises to fulfill their social responsibilities,so as to ensure the reliability and safety of enterprises in China controlled by "incoming" overseas capital,so as to generate positive externalities in cross-border mergers and acquisitions by foreign investors in China.