Can digitalization facilitate cross-border M&A? Evidence from Chinese A-share listed companies

Abstract

This paper investigates the impact of digitalization on cross-border M&A completion probability. Using a sample of Chinese firms listed on the A-share market between 2005 and 2021, we find that firm digitization significantly promotes cross-border M&A completion. The finding still holds after a series of robustness tests. Further analysis indicates that the promotion effect is more pronounced in samples with high finance constraints, technology-based M&A transactions, and short institutional distances. Further, we provide evidence that digitalization facilitates cross-border M&A by enhancing firms' innovation capabilities and reducing management myopia. This paper provides new light on how the development of digital technologies is changing the ways publicly traded corporations behave internationally.