Does institutional distance affect cross-border acquisitions of China’s multinational companies?

Kevin Christoper and Ardhiani Fadila
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Kevin Christoper: Management Program, Faculty of Economics and Business, University of Pembangunan Nasional Veteran Jakarta, DKI Jakarta, Indonesia
Ardhiani Fadila: Management Program, Faculty of Economics and Business, University of Pembangunan Nasional Veteran Jakarta, DKI Jakarta, Indonesia

International Journal of Research in Business and Social Science (2147-4478), 2022, vol. 11, issue 7, 168-177

Abstract: This paper aims to examine the effect of institutional distance on the level of equity ownership. The sampling technique in this research used a purposive sampling technique. The sample of this research is cross-border acquisition transactions between Chinese multinational companies and target countries in the Southeast Asia region in the 2015 – 2019 period; thus, the total sample of this research is 32 transactions. The analysis technique in this study was Multiple Linear Regression with the Ordinary Least Square (OLS) model. The main finding of this study demonstrates that economic and geographical distance partially affect the level of equity ownership significantly. Meanwhile, administrative distance does not partially affect the level of equity ownership of the target company by Chinese multinational companies. Key Words:cross-border acquisition, institutional distance, level of equity ownership

Date: 2022
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