Can common institutional owners inhibit bad mergers and acquisitions? Evidence from China

Siyuan Zhu, Rong Lu, Tianli Xu, Wenbin Wu and Yang Chen

International Review of Economics & Finance, 2024, vol. 89, issue PA, 246-266

Abstract: Using a sample of Chinese A-share listed companies from 2007 to 2020, we explore the impact of common institutional owners on M&A activities. Our results strongly support the “synergy governance” view, according to which common institutional owners perform more actively and effectively in monitoring against bad M&As and improving M&A quality, especially for investors who have closer peer linkages, greater industry power, and longer-term holdings. The mechanism test finds that in firms with poorer information environment, vaguer industry information and lower governance level, common institutional owners have a more significant inhibitory effect on bad M&As, confirming that they do have information advantages and supervisory advantages. Overall, our research explores the positive side of common institutional investors.

Keywords: Common institutional owners; Conspiracy tort; Synergy governance; Bad mergers and acquisitions; Merger and acquisition performance (search for similar items in EconPapers)
JEL-codes: G14 G23 G34 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:89:y:2024:i:pa:p:246-266

DOI: 10.1016/j.iref.2023.07.045

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