Imprinting Home Institutional Influence: Chinese Firms’ Long-Term Performance in Cross-Border Mergers and Acquisitions

Abstract

Over the past three decades, China has experienced rapid economic growth and social development. China’s gross domestic product (GDP) per capita grew dramatically, from US$279 in 1982 to US$6,767 in 2012,1 lifting billions of people out of poverty.2 In 2010, China overtook Japan to become world’s second largest economy.3 Institutional reform has played an important role in the dramatic change (Peng, 2003). China has been transitioning its economic system from a Soviet-style planned economy to a market-oriented economy since 1978. During the early stage of economic liberalization, Chinese government reformed state-owned enterprises (SOEs) to improve their efficiencies, while allowing privately owned enterprises (POEs) to re-enter the economy. At the same time, China adopted the open-door policy in 1978, aiming to attract more foreign direct investments (FDIs). In the second stage of reform that started in 1992, many market institutions, such as stock exchanges, were established to provide a more level playing field for both SOEs and POEs. China’s entry into the World Trade Organization (WTO) marked the beginning of China’s third stage of economic development that, started in 2011 — the globalization stage — in which China’s institutions are increasingly shaped by global standards. Since then, China has experienced a great acceleration of global trade and economic growth.KeywordsStock MarketAbnormal ReturnChinese FirmTarget FirmInternational Business StudyThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.