Uncertainty and China’s cross-border mergers and acquisitions

Yanming Sun, Shuhan Duan, Lili Wang and Caili Yang

Journal of the Asia Pacific Economy, 2022, vol. 27, issue 3, 515-533

Abstract: This study examines the relationship between uncertainty and China’s cross-border mergers and acquisitions (M&As). Based on 1847 cross-border M&A deals made by Chinese firms in 130 countries and regions over the period of 2002 − 2018, we find that Chinese acquirers are less likely to conduct cross-border M&A deals when uncertainty is high in the target country. The results are robust to alternative samples and measures of uncertainty. Furthermore, we find that uncertainty has a dynamic impact on China’s cross-border M&As. Variations in the economic environment close to the time of an announcement have a greater influence on affecting the final occurrence of M&A transactions than those in a more distant period. Lastly, market conditions are important in shaping the effects of uncertainty on M&As. The negative effects of uncertainty are larger in countries with weaker financial markets and government regulation and lower levels of openness.

Date: 2022
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DOI: 10.1080/13547860.2022.2088511

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