Corporate Ownership, Political Connections and M&A: Empirical Evidence from China

Ningyue Liu (), Liming Wang () and Min Zhang ()
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Ningyue Liu: School of Management and Economicsv Beijing Institute of Technology
Liming Wang: School of Economics and Management, Beijing University of Technology and Irish Institute for Chinese Studies, University College Dublin
Min Zhang: School of Business, Renmin University of China

Asian Economic Papers, 2013, vol. 12, issue 3, 41-57

Abstract: This paper examines the impact of political connections on corporate mergers and acquisitions (M&As) behavior using data from companies listed in Chinese equity markets during the period 1998 to 2010. Our empirical results indicate that firms with political connections have a greater probability of engaging in M&As and tend to engage in larger-scale M&As. The impact of political connections on corporate M&As is mainly realized via government intervention in state-owned enterprises (SOEs). The paper also investigates the impact of political connections on M&A performance, demonstrating a significantly negative impact when SOEs are involved but a significantly positive impact when non-SOEs are involved. The findings of this paper suggest that the political connections of Chinese listed firms have a strong influence on M&A activities and performance. © 2013 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

Keywords: political connection; corporate ownership; corporate M&A; firm behavior and performance (search for similar items in EconPapers)
JEL-codes: G34 G38 M21 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (7)

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