Does broadband infrastructure affect corporate mergers and acquisitions? Quasi-natural experimental evidence from China

Abstract

This study investigates the relationship between broadband infrastructure and corporate M&A. Using the shock of “Broadband China” policy, we conduct difference-in-differences estimations and find that broadband infrastructure significantly increases corporate M&A, which remains robust after a series of robustness checks. Further analysis shows that the underlying mechanism is alleviating information asymmetry and increasing market competition. Finally, the heterogeneity analysis shows that our results are significant mainly in the group with high regional market segmentation, manufacturing industries, and non-state enterprises. Overall, this study enriches the research on the driving factors of M&A at the firm level and provides a micro-level evaluation of economic consequences of broadband infrastructure.