Hometown-based business associations and M&As performance: Evidence from China

Jibin Yang, Fansheng Jia, Shanmin Li and Wenfeng Wu

Pacific-Basin Finance Journal, 2022, vol. 73, issue C

Abstract: This paper examines the impact of hometown-based business associations (HBAs), formal social networks constructed based on members sharing a hometown, on the cross-province M&As performance of Chinese A-share listed private firms. We find that HBAs significantly increase firms' cross-province M&As performance. The positive association between HBAs and M&As performance is more pronounced in the target provinces with a lower level of marketization, underdeveloped intermediary organization markets, and limited access to information. The findings suggest that information is an important channel through which HBAs improve M&As performance. Moreover, HBAs are substitutes for informal social networks. Our results are robust to various endogeneity checks.

Keywords: Hometown-based business associations; Formal social networks; M&As (search for similar items in EconPapers)
JEL-codes: G14 G34 Z13 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:73:y:2022:i:c:s0927538x22000397

DOI: 10.1016/j.pacfin.2022.101744

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