Corporate social responsibility and cross-border M&A: The moderating effect of institutional distance.

Haiting Li,Mingwei Sun,Feng Zhang,Shuzhen Li,Xiangcen Zhan,Stefan Cristian Gherghina

doi:10.1371/journal.pone.0262343

Abstract

Drawing upon a dataset of cross-border mergers and acquisitions (M&A) events of Chinese enterprises from 2010 to 2017, this study investigates the impact of corporate social responsibility (CSR) on the completion of cross-border M&A with a focus on the moderating role of institutional distance. The results highlight the significance of CSR on the completion of cross-border M&A. The robustness tests including changing estimation model, new measurements, propensity score matching, and instrumental variable tests show that the main results are consistent. Second, both formal and informal institutional distance have positive moderating effects of CSR on the completion of cross-border M&A.

Highlights

Cross-border mergers and acquisitions (M&A), known as overseas M&A, refers to the corporate action of purchasing the shares or assets of another company in a foreign country [1]
We examine the impact of corporate social responsibility (CSR) on the completion of cross-border M&A using a logit model to test the hypotheses with the dependent, independent, and control variables defined in the
Model (4) of Table 6 examines the moderating effect of informal institutional distance, and the interaction term is significantly positive at the 10% confidence level

Summary

Introduction

Cross-border mergers and acquisitions (M&A), known as overseas M&A, refers to the corporate action of purchasing the shares or assets of another company in a foreign country [1]. To the best of our knowledge, this is the first empirical study to examine the interaction of CSR and institutional distance on the completion of cross-border M&A in emerging markets. We find that CSR has a positive role in the completion of the cross-border M&A of Chinese enterprises, thereby supporting the stakeholder theory. Both formal and informal institutional distance moderate the effect of CSR positively. The results of this study can help increase the completion rate of cross-border M&A by Chinese enterprises as it investigates the dynamic nature between institutional distance and CSR in cross-border M&A

Literature review and hypothesis development

Results

Discussion and conclusion