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Uncertainty and China’s cross-border mergers and acquisitions

Author

Listed:
  • Yanming Sun
  • Shuhan Duan
  • Lili Wang
  • Caili Yang

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.

Suggested Citation

  • Yanming Sun & Shuhan Duan & Lili Wang & Caili Yang, 2022. "Uncertainty and China’s cross-border mergers and acquisitions," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 27(3), pages 515-533, July.
    • Handle: RePEc:taf:rjapxx:v:27:y:2022:i:3:p:515-533
    DOI: 10.1080/13547860.2022.2088511
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