How do political connections cause SOEs and non-SOEs to make different M&A decisions/performance? Evidence from China

Qigui Liu, Tianpei Luo, Gary Gang Tian

Research output: Contribution to journalArticle

7 Citations (Scopus)

Abstract

This study examines the impact that political connections have on Mergers and Acquisitions (M&A) performance and the decisions of Chinese listed firms. We find that political connections destroy (create) value in SOEs (non-SOEs). Our findings show that connected SOEs are more likely to acquire local targets, especially when the local unemployment rate is high and when the firms are controlled by the local government, and they are less likely to conduct vertical mergers. M&A decisions of connected non-SOEs are less influenced by the government; instead, political connections in non-SOEs help bidders to integrate vertically and obtain external financing support.

Original languageEnglish
Pages (from-to)2579-2619
Number of pages41
JournalAccounting and Finance
Volume59
Issue number4
Early online date2017
DOIs
Publication statusPublished - Dec 2019

Keywords

  • Anti-corruption
  • Mergers and acquisitions
  • Ownership structure
  • Political connections
  • Property right law

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