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Empirical Study of Factors Influencing Performance of Chinese Enterprises in Overseas Mergers and Acquisitions in Context of Belt and Road Initiative—A Perspective Based on Political Connections

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  • Ping Lin
  • Boqiang Lin
  • Mengting Lin
  • Chen Lin

Abstract

Based on overseas M&A cases during 2013–2017, this study investigated the factors influencing the performances of Chinese enterprises in overseas M&A within the context of the “Belt and Road Initiative” from the perspective of political connections. The following conclusions were reached: (1) the ownership of a target firm of an M&A in a member country of the “Belt and Road” club has no significant impact on the firm’s performance in the short term but has a significant negative impact in the long run; (2) a higher proportion of state-owned shares is conducive to accomplishing overseas M&A; (3) having senior executives with strong political backgrounds would improve the firm’s performance in overseas M&A in the short term but may damp in the long run. Chinese enterprises can take advantage of the “Belt and Road Initiative” and government resources to promote overseas M&A. They should carefully select their target firms and make efforts to strengthen integration in order to achieve good synergy between the acquiring and acquired firms. The government should improve the communication and coordination mechanisms between China and other member countries of the “Belt and Road Initiative”, provide more supports to achieve win–win scenarios among countries, markets, and enterprises.

Suggested Citation

  • Ping Lin & Boqiang Lin & Mengting Lin & Chen Lin, 2020. "Empirical Study of Factors Influencing Performance of Chinese Enterprises in Overseas Mergers and Acquisitions in Context of Belt and Road Initiative—A Perspective Based on Political Connections," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(7), pages 1564-1580, May.
    • Handle: RePEc:mes:emfitr:v:56:y:2020:i:7:p:1564-1580
    DOI: 10.1080/1540496X.2019.1676226
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    Citations

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    Cited by:

    1. Sidong Zhao & Yiran Yan & Jing Han, 2021. "Industrial Land Change in Chinese Silk Road Cities and Its Influence on Environments," Land, MDPI, vol. 10(8), pages 1-30, July.
    2. Li, Xiao-Lin & Li, Jingya & Wang, Jia & Si, Deng-Kui, 2021. "Trade policy uncertainty, political connection and government subsidy: Evidence from Chinese energy firms," Energy Economics, Elsevier, vol. 99(C).
    3. Qing Xie & Hua Yin, 2023. "Institutional Differences and the Choice of Outward Foreign Direct Investment Mode under the “Belt and Road” Initiative: Experience Analysis Based on China’s Manufacturing Enterprises," Sustainability, MDPI, vol. 15(9), pages 1-26, April.
    4. Jin-Young Jung & Wei Wang & Sung-Woo Cho, 2020. "The Role of Confucius Institutes and One Belt, One Road Initiatives on the Values of Cross-Border M&A: Empirical Evidence from China," Sustainability, MDPI, vol. 12(24), pages 1-20, December.
    5. Na Qin & Yiping Liu, 2022. "Performance Compensation Commitment in Mergers and Acquisitions," Sustainability, MDPI, vol. 14(23), pages 1-14, December.

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