How does industrial policy affect corporate M&A Activities?

Jingjing Guo, Zhihong Huang and Baicheng Zhou

Finance Research Letters, 2025, vol. 75, issue C

Abstract: This paper uses the Five-Year Plan (FYP) to conduct a quasi-natural experiment and examines the impact of China's industrial policies on corporate mergers and acquisitions (M&As). The results show that firms supported by industrial policies are likelier to initiate M&As and do so more frequently. Large firms and state-owned enterprises are primarily responsible for these M&As. Additionally, firms that benefit from government subsidies and low-interest loans have greater capacity to initiate M&As. While industrial policy does not significantly influence M&A performance in the short term, it can have a negative effect in the long term. These findings contribute to a nuanced understanding of the government's role in corporate strategy.

Keywords: M&As; Industrial policy; Five-Year Plans (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:75:y:2025:i:c:s1544612325001734

DOI: 10.1016/j.frl.2025.106909

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