IDEAS home Printed from https://ideas.repec.org/a/eee/finana/v93y2024ics1057521924001418.html
   My bibliography  Save this article

Reasons for M&A: A perspective from senior executives' rural experiences- Evidence from Chinese private listed companies

Author

Listed:
  • Xiao, Xiaohong
  • Peng, Jinxia
  • He, Xiaogang

Abstract

Mergers and Acquisitions (M&A) are critical strategies that significantly shape a company's direction. By drawing upon imprinting theory, this study analyzes the data of publicly traded companies spanning the years 2007 to 2018 in order to explore the formation of executives' imprints from their rural experiences and their positive impact on M&A decisions. Furthermore, based on corporate behavior theory, it was also verified that the cooperate aspiration gap is an important factor in promoting the dynamic changes of imprints formed by the rural experiences of executives, which in turn affects the relationship between the rural experiences of executives and corporate M&A decisions. The study reveals that the senior executives' rural experiences significantly boost the propensity of a company adopting M&A as a growth strategy. This tendency is particularly pronounced for younger executives and those less affected by a culture of familism. In addition, the study notes a progressive change in these imprints due to the corporate aspiration gap, which affects M&A strategies. Specifically, when a firm's performance fails to meet its objectives and societal expectations, it strengthens the link between an executive's rural background and the pursuit of M&A for expansion. Conversely, when a firm exceeds these aspirations, the correlation is weakened. By examining how individual imprints are formed, evolve, and impact decision-making, this study provides fresh perspectives on the factors driving corporate M&A decisions.

Suggested Citation

  • Xiao, Xiaohong & Peng, Jinxia & He, Xiaogang, 2024. "Reasons for M&A: A perspective from senior executives' rural experiences- Evidence from Chinese private listed companies," International Review of Financial Analysis, Elsevier, vol. 93(C).
  • Handle: RePEc:eee:finana:v:93:y:2024:i:c:s1057521924001418
    DOI: 10.1016/j.irfa.2024.103209
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1057521924001418
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.irfa.2024.103209?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jaskiewicz, Peter & Combs, James G. & Rau, Sabine B., 2015. "Entrepreneurial legacy: Toward a theory of how some family firms nurture transgenerational entrepreneurship," Journal of Business Venturing, Elsevier, vol. 30(1), pages 29-49.
    2. Flavio Cunha & James J. Heckman & Susanne M. Schennach, 2010. "Estimating the Technology of Cognitive and Noncognitive Skill Formation," Econometrica, Econometric Society, vol. 78(3), pages 883-931, May.
    3. Carr, Jon C. & Sequeira, Jennifer M., 2007. "Prior family business exposure as intergenerational influence and entrepreneurial intent: A Theory of Planned Behavior approach," Journal of Business Research, Elsevier, vol. 60(10), pages 1090-1098, October.
    4. James Heckman & Flavio Cunha, 2007. "The Technology of Skill Formation," American Economic Review, American Economic Association, vol. 97(2), pages 31-47, May.
    5. Raj Chetty & John N. Friedman & Nathaniel Hilger & Emmanuel Saez & Diane Whitmore Schanzenbach & Danny Yagan, 2011. "How Does Your Kindergarten Classroom Affect Your Earnings? Evidence from Project Star," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(4), pages 1593-1660.
    6. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    7. Melissa A. Schilling & H. Kevin Steensma, 2002. "Disentangling the Theories of Firm Boundaries: A Path Model and Empirical Test," Organization Science, INFORMS, vol. 13(4), pages 387-401, August.
    8. Sara B. Moeller & Frederik P. Schlingemann & René M. Stulz, 2005. "Wealth Destruction on a Massive Scale? A Study of Acquiring‐Firm Returns in the Recent Merger Wave," Journal of Finance, American Finance Association, vol. 60(2), pages 757-782, April.
    9. Thomas Zellweger & Melanie Richards & Philipp Sieger & Pankaj C. Patel, 2016. "How Much Am I Expected to Pay for My Parents’ Firm? An Institutional Logics Perspective on Family Discounts," Entrepreneurship Theory and Practice, , vol. 40(5), pages 1041-1069, September.
    10. Frank R. Lichtenberg & Donald Siegel, 1987. "Productivity and Changes in Ownership of Manufactoring Plants," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3, Specia), pages 643-684.
    11. Torsten M. Pieper & Anne D. Smith & Jerry Kudlats & Joseph H. Astrachan, 2015. "The Persistence of Multifamily Firms: Founder Imprinting, Simple Rules, and Monitoring Processes," Entrepreneurship Theory and Practice, , vol. 39(6), pages 1313-1337, November.
    12. Pino G. Audia & Henrich R. Greve, 2006. "Less Likely to Fail: Low Performance, Firm Size, and Factory Expansion in the Shipbuilding Industry," Management Science, INFORMS, vol. 52(1), pages 83-94, January.
    13. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
    14. Breugst, Nicola & Patzelt, Holger & Rathgeber, Philipp, 2015. "How should we divide the pie? Equity distribution and its impact on entrepreneurial teams," Journal of Business Venturing, Elsevier, vol. 30(1), pages 66-94.
    15. Bai, Xiaoou & Tsang, Eric W.K. & Xia, Wei, 2020. "Domestic versus foreign listing: Does a CEO's educational experience matter?," Journal of Business Venturing, Elsevier, vol. 35(1).
    16. Jiang, Fuxiu & Cai, Xinni & Nofsinger, John R. & Zheng, Xiaojia, 2020. "Can reputation concern restrain bad news hoarding in family firms?," Journal of Banking & Finance, Elsevier, vol. 114(C).
    17. Curtis L. Wesley & Gregory W. Martin & Darryl B. Rice & Connor J. Lubojacky, 2022. "Do the Right Thing: The Imprinting of Deonance at the Upper Echelons," Journal of Business Ethics, Springer, vol. 180(1), pages 187-213, September.
    18. Banalieva, Elitsa R. & Karam, Charlotte M. & Ralston, David A. & Elenkov, Detelin & Naoumova, Irina & Dabic, Marina & Potocan, Vojko & Starkus, Arunas & Danis, Wade & Wallace, Alan, 2017. "Communist footprint and subordinate influence behavior in post-communist transition economies," Journal of World Business, Elsevier, vol. 52(2), pages 209-229.
    19. Ding, Haoyuan & Hu, Yichuan & Li, Chang & Lin, Shu, 2021. "CEO country-specific experience and cross-border mergers and acquisitions," Journal of Corporate Finance, Elsevier, vol. 69(C).
    20. James G. March & Zur Shapira, 1987. "Managerial Perspectives on Risk and Risk Taking," Management Science, INFORMS, vol. 33(11), pages 1404-1418, November.
    21. Paresha N. Sinha & Peter Jaskiewicz & Jenny Gibb & James G. Combs, 2020. "Managing history: How New Zealand's Gallagher Group used rhetorical narratives to reprioritize and modify imprinted strategic guideposts," Strategic Management Journal, Wiley Blackwell, vol. 41(3), pages 557-589, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Elizabeth N. K. Lim & Brian T. McCann, 2014. "Performance Feedback and Firm Risk Taking: The Moderating Effects of CEO and Outside Director Stock Options," Organization Science, INFORMS, vol. 25(1), pages 262-282, February.
    2. Holla,Alaka & Bendini,Maria Magdalena & Dinarte Diaz,Lelys Ileana & Trako,Iva, 2021. "Is Investment in Preprimary Education Too Low ? Lessons from (Quasi) ExperimentalEvidence across Countries," Policy Research Working Paper Series 9723, The World Bank.
    3. Petra Dickel & Monika Sienknecht & Jacob Hörisch, 2021. "The early bird catches the worm: an empirical analysis of imprinting in social entrepreneurship," Journal of Business Economics, Springer, vol. 91(2), pages 127-150, March.
    4. Sonia Bhalotra & Martin Karlsson & Therese Nilsson & Nina Schwarz, 2022. "Infant Health, Cognitive Performance, and Earnings: Evidence from Inception of the Welfare State in Sweden," The Review of Economics and Statistics, MIT Press, vol. 104(6), pages 1138-1156, November.
    5. Shoji, Masahiro, 2020. "Early-Life Circumstances and Adult Locus of Control: Evidence from 46 Developing Countries," MPRA Paper 99987, University Library of Munich, Germany.
    6. Lin, Dajun & Lutter, Randall & Ruhm, Christopher J., 2018. "Cognitive performance and labour market outcomes," Labour Economics, Elsevier, vol. 51(C), pages 121-135.
    7. M. Caridad Araujo & Pedro Carneiro & Yyannú Cruz-Aguayo & Norbert Schady, 2016. "Teacher Quality and Learning Outcomes in Kindergarten," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(3), pages 1415-1453.
    8. Bütikofer, Aline & Mølland, Eirin & Salvanes, Kjell G., 2018. "Childhood nutrition and labor market outcomes: Evidence from a school breakfast program," Journal of Public Economics, Elsevier, vol. 168(C), pages 62-80.
    9. Huber, Laura Rosendahl & Sloof, Randolph & Van Praag, Mirjam, 2014. "The effect of early entrepreneurship education: Evidence from a field experiment," European Economic Review, Elsevier, vol. 72(C), pages 76-97.
    10. Kautz, Tim & Heckman, James J. & Diris, Ron & ter Weel, Bas & Borghans, Lex, 2014. "Fostering and Measuring Skills: Improving Cognitive and Non-Cognitive Skills to Promote Lifetime Success," IZA Discussion Papers 8696, Institute of Labor Economics (IZA).
    11. Almlund, Mathilde & Duckworth, Angela Lee & Heckman, James & Kautz, Tim, 2011. "Personality Psychology and Economics," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 4, chapter 0, pages 1-181, Elsevier.
    12. Letian Zhang, 2019. "Who Loses When a Team Wins? Better Performance Increases Racial Bias," Organization Science, INFORMS, vol. 30(1), pages 40-50, February.
    13. Bernal, Pedro & Mittag, Nikolas & Qureshi, Javaeria A., 2016. "Estimating effects of school quality using multiple proxies," Labour Economics, Elsevier, vol. 39(C), pages 1-10.
    14. Bloemen-Bekx, Mira & Van Gils, Anita & Lambrechts, Frank & Sharma, Pramodita, 2021. "Nurturing offspring’s affective commitment through informal family governance mechanisms," Journal of Family Business Strategy, Elsevier, vol. 12(2).
    15. Martin Schlotter, 2012. "Educational Production in Preschools and Schools - Microeconometric Evidence from Germany," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 41.
    16. Edwin Leuven & Sturla A. Løkken, 2020. "Long-Term Impacts of Class Size in Compulsory School," Journal of Human Resources, University of Wisconsin Press, vol. 55(1), pages 309-348.
    17. Akabayashi, Hideo & Ruberg, Tim & Shikishima, Chizuru & Yamashita, Jun, 2023. "Education-oriented and care-oriented preschools: Implications on child development," Labour Economics, Elsevier, vol. 84(C).
    18. Gørtz, Mette & Johansen, Eva Rye & Simonsen, Marianne, 2018. "Academic achievement and the gender composition of preschool staff," Labour Economics, Elsevier, vol. 55(C), pages 241-258.
    19. Werner, Katharina & Woessmann, Ludger, 2021. "The Legacy of COVID-19 in Education," IZA Discussion Papers 14796, Institute of Labor Economics (IZA).
    20. Samuel Berlinski & Norbert Schady, 2015. "Daycare Services: It’s All about Quality," Palgrave Macmillan Books, in: Samuel Berlinski & Norbert Schady (ed.), The Early Years, chapter 4, pages 91-119, Palgrave Macmillan.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finana:v:93:y:2024:i:c:s1057521924001418. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620166 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.