Abstract
This study examines how national cultural policies such as Confucius Institutes and One Belt, One Road initiatives (BRI) affect the post-acquisition returns of Chinese cross-border mergers and acquisitions based on data from a sample of 192 transactions covering 2011 to 2015. We find that the cultural export of Chinese Confucius Institutes and the BRI exert a significantly positive impact on long-term acquirer returns, while cultural/institutional distance exerts a negative impact. Further evidence shows that Confucius Institutes and BRI mitigate the negative effect of cultural distance between merging firms. These results offer the first evidence that national cultural translation has substantial impacts on the long-run acquirer financial performance of cross-border mergers that decrease cultural institutional heterogeneity between countries.
Highlights
China’s economy has been globalizing since it entered the World Trade Organization in 2001
Column (1) shows that the establishment of Confucius Institutes positively affects the long-term performance of cross-border mergers and acquisitions (CBM&A) for Chinese enterprises, providing support for Hypothesis 3. These results are in line with the findings of Liu and Lu [26] and Xu. et al [50], suggesting that the long-term returns of acquiring firms tend to increase due to the cultural export activities of Confucius Institutes
This study investigates the role of national cultural policies such as Confucius Institutes and BRI on the values of cross-border merger activity using a sample of 192 acquisitions conducted from 2011 to 2015 by Chinese listed firms
Summary
China’s economy has been globalizing since it entered the World Trade Organization in 2001. Data provided by the DealGlobe Hurun China Cross-border M&A Report show that CBM&As have entered the United States, Europe, and other developed countries but have flowed to developing economies Given this diversity of investment objects, Chinese companies pursuing overseas M&A face the challenges of institutional differences such as between legal norms and judicial systems but are subject to the influence of cultural factors. To deepen the go-global strategy, the BRI, which differs from the traditional regional cooperation system, can help remove the technical and implementation obstacles in international trade issues and reduce transaction costs [13] It has received a positive response from countries and regions along the route and has created the conditions required for Chinese enterprises to truly go global. The final section provides a summary of the conclusion and discusses the implications of the study
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