Overseas Mergers Research Articles

How does exchange rate fluctuation affect the efficiency of Chinese enterprises' overseas mergers and acquisitions

With the changes in the global trade environment, the impact of exchange rate on cross-border mergers and acquisitions (M&A) of enterprises cannot be ignored. Taking Chinese listed enterprises as the research sample, we establish a model of the impact of exchange rate fluctuations on the efficiency of overseas mergers and acquisitions. The findings are as follows: (1) Exchange rate fluctuation significantly affects the completion rate of M&A. (2) Exchange rate fluctuations play an important role in shortening the time of overseas M&A. (3) Exchange rate volatility significantly affects M&A efficiency in high-income countries and highly competitive industries.

Analysis of Financial Risks and Preventive Measures in The Process of Reverse Transnational Merger and Integration of Chinese Enterprises

Reverse transnational merger and acquisition is a kind of international operation mode in which enterprises in emerging markets merge or acquire enterprises in advanced countries, so as to obtain strategic resources. This is also a "springboard" for enterprises in emerging economies to obtain foreign resources and quickly move to the international market. The Chinese government plays an important role in cross-border mergers and acquisitions, and the integration process is becoming more difficult and the merger is becoming more likely to fail. In addition, Chinese enterprises show new characteristics in many aspects, such as the object of merger and acquisition, the object of merger and acquisition, the industry and the way of merger and acquisition. Through cross-border mergers and acquisitions, enterprises can expand overseas markets, achieve transformation and upgrading, and improve the core competitiveness of enterprises. Based on the case of Geely Auto's acquisition of Volvo, this paper analyzes various financial risks it faces in overseas mergers and acquisitions, and puts forward corresponding countermeasures for Chinese enterprises to prevent and guard against financial risks in overseas mergers and acquisitions and promote the smooth progress of mergers and acquisitions.

Value Creation after Chinese Firms Acquire Financially Distressed Overseas Firms: Viva’s Acquisition of Clarks Group

Purpose - In recent years, overseas mergers and acquisitions have become a crucial means for many enterprises to enter foreign markets, achieve diversification of corporate brands, expand business scope, increase transaction amounts, and rapidly scale corporate operations. This study aims to investigate value creation by acquirers and potential influencing factors to determine whether companies facing financial difficulties through overseas mergers can generate effective value.
 Design/Methodology/Approach - This study examines post-acquisition value creation by companies through literature review and analysis of financial data from the last three years. It adopts a case study approach, focusing on Viva Goods Company Limited’s acquisition of Clarks in the UK under LionRock. The goal is to explore value creation and influencing factors in this specific context.
 Findings - The study reveals that the issues of target companies in financial distress are concentrated on working capital, while historical advantages and market value do not decline synchronously. Therefore, when facing distressed target companies, the acquiring party can not only revitalize the target company through capital injection to quickly restore operational status, expand market share, and form new competitive strength but also help its own company achieve short-term and long-term stock price increases, thereby gaining profits.
 Research Implications - This study explores factors in value creation, assessing target companies pre-merger, and analyzing post-merger integration for value growth. It focuses on risks and value in financially distressed target companies, aiding enterprises in acquiring distressed overseas firms, serving as a market research case for multinational corporate mergers.

Environmental regulation and outward foreign direct investment: evidence from Chinese firms’ overseas mergers and acquisitions

ABSTRACT While the literature shows that stricter environmental regulations deter exports and inward foreign direct investment (FDI), few studies examine the impacts on outward FDI, especially for developing countries. In this paper, we analyse this issue in the context of China, which is the largest developing country in terms of FDI. We collect the transaction-level data of all the overseas mergers and acquisitions (M&As) by Chinese firms from 2000 to 2019. For the identification of the causal effect, we exploit the implementation of the Environmental Protection Law in 2015 as a quasi-natural experiment and carry out the difference-in-difference-in-differences analysis (DDD). The results show significant impacts of stricter environmental regulations on outward FDI. When the provincial emission reduction target increases by 10% points, the number of overseas M&A transactions in the high-polluting industries has increased by 32 every year since 2015. Moreover, the investments are more likely towards countries with better environmental protection. This suggests that firms aim at gaining cleaner technologies via M&As rather than transferring pollution abroad.

Legal Dilemmas in the Regulation of Mergers and Acquisitions of Chinese Multinational Corporations in the Context of Comparative Law and its Response

The global economy is in a sustained recession due to the impact of the new epidemic. As one of the few economies 'bucking the trend', Chinese companies have been presented with new opportunities to invest and merge overseas. However, decades after the 'going out' strategy was implemented, China still suffers from over-regulation, lack of regulations and inadequate protection for its cross-border Mergers and Acquisitions companies, resulting in frequent failures. How to address the risks of overseas Mergers and Acquisitions by Chinese companies from a national perspective is an urgent issue. This paper compares Chinese Mergers and Acquisitions regulations with those of other countries and examines the problems, causes, advantages of other countries and solutions for China. It is concluded that "imperfect legal norms", "restrictions between China and other countries" and "lack of fluent legal information on enterprises" are the factors that lead to the problems. The reason for this is that China is an emerging market economy that lacks the time to accumulate experience and improve. Through this analysis, recommendations are made to the Chinese government to improve regulations, taxes and remedies.

Typical Tax Risks of Overseas M & A of Enterprises and Their Countermeasures

In recent years, the proportion of Chinese enterprises participating in overseas M & A has increased year by year. Accordingly, tax disputes caused by mergers and acquisitions are not uncommon, and the disputes are followed by heavy tax fines, resulting in unprovoked losses. The reason is that it ignores the different risk points brought by different stages of M & transactions. Based on the perspective of the M & A stage, this paper makes a comprehensive analysis of the tax-related risk points of enterprises that are easy to be ignored and destructive in the process of M & A. Tax due diligence is a very important impact which could influence the entire activity. At the same time, in order to avoid such tax risks, this paper puts forward preventive measures. In the decision-making and management of overseas mergers and acquisitions of Chinese enterprises, we should constantly strengthen the awareness of tax risk prevention, and effectively integrate tax risk prevention and control into the daily work of enterprise management and financial personnel. At the same time, enterprises should establish domestic and foreign tax risk control systems, so as to better deal with the opportunities and challenges brought by economic globalization.

CEO Overconfidence and Corporate Overseas M&A: The Case of Techcent Environment Company

Purpose – In recent years, overseas M&As have become an important way for enterprises to invest and expand. Yet, most overseas deals are not successful. Behavioral finance research attributes the failure of overseas M&A to the irrational cognition of corporate decision-makers: that is, overconfidence. This study focuses on exploring the relationship between CEO overconfidence and overseas M&A, and clarifying the impact of CEO overconfidence on the motivation, payment method, and corporate performance of overseas M&A. Design/Methodology/Approach – First, based on the hubris hypothesis, this study reviews the literature on CEO overconfidence and overseas M&A. Second, this study uses the case analysis method, taking Techcent Environmental Co., Ltd., as an example, to study the impact of CEO overconfidence on the motivation, payment method, and corporate performance of overseas M&A. Findings – Overconfident CEOs tend to make enterprises carry out overseas M&As and use cash in the settlement. At the same time, overconfident CEO overseas mergers and acquisitions have a negative impact on both short-term and long-term corporate performance. Research Implications – This study expands the scope of case studies on the theory of executive overconfidence in behavioral finance, verifies the hubris hypothesis, enriches the case study literature on CEO confidence in behavioral finance, and provides reference for the management and overseas M&As of corporate executives.

Risk Analysis of Cultural Enterprises' Overseas Mergers and Acquisitions--Taking Wanda's Acquisition of American Legendary Pictures as an Example

Risk Analysis of Cultural Enterprises' Overseas Mergers and Acquisitions--Taking Wanda's Acquisition of American Legendary Pictures as an Example

Experiential learning, institutional quality and Chinese state-owned firms’ cross-border acquisitions

PurposeState-owned firms play important roles in Chinese cross-border acquisition (CBA) activities. However, compared with private firms, state-owned firms have a lower likelihood of acquisition completion and take longer to complete a deal. This paper aims to determine why this phenomenon exists and how state-owned firms can overcome the constraints of their identity.Design/methodology/approachBy integrating organizational learning theory with institutional theory, this paper attempts to answer the research questions from a legitimacy perspective. Employing Chinese CBA data from 1982 to 2014, the authors use a logit model and a random effects model to test the hypothesis.FindingsThe results show that a state-owned identity easily causes legitimacy concerns among host country regulatory agencies; thus, it may result in longer and more uncertain evaluation behaviors, which lead to a lower likelihood of CBA completion and a longer deal duration. Only experience with failed acquisitions can increase CBA completion probability. Furthermore, in very complex decision-making environments, such as that surrounding deal duration, only specific types of experience (i.e. experience of failed international acquisitions) can trigger learning behavior, whereas general experience (i.e. failed acquisition experience) has little influence. Favorable bilateral relationships may not improve the completion rate and efficiency of state-owned firms, but high-quality host country institutions lead to a higher likelihood of CBA completion among state-owned firms; however, this may be not conducive to decreasing the time needed to complete an acquisition deal.Originality/valueFirst, by discussing the completion rate and duration of CBAs conducted by state-owned firms and analyzing the factors that influence them, this paper enriches and develops the theory of organizational overseas mergers and acquisitions (M&As). Second, by adopting a legitimacy perspective and integrating institutional theory, the authors theorize how state-owned status influences firms’ M&A completion rate and time and test the hypotheses empirically; thus, this paper improves and deepens institutional theory. Third, by discussing how different types of experience (i.e. successful experience vs failed acquisition experience) influence the acquisition completion rate and duration and how general experience and specific types of experience affect these two dependent variables differently, this paper explains how state-owned firms can learn effectively from experience, contributing to organizational learning theory.

Analysis of Tencent’s Acquisition of Supercell: Competitive Strategy Perspective

As one of the most successful game companies in China, Tencent has always been essential to its continuous development and growth through frequent and effective overseas mergers and acquisitions. To achieve the same excellent results in mobile games, Tencent spent $8.6 billion in 2016 to acquire an 84.3% stake in a Finnish game developer, taking the world's most successful mobile game developer into its pocket. Therefore, the research and analysis of the representative event of Tencent's acquisition of Supercell can provide valuable suggestions and meaningful references for other game companies' overseas mergers and acquisitions. In this paper, Firstly, Supercell's enterprise model and competitive market advantage are studied in depth. The adaptability of Supercell and Tencent is discussed, Tencent's M&A behavior is evaluated, and suggestions and summaries are given.

Coevolution of post-merger integration and dual knowledge networks reconstruction: evidence from Chinese overseas acquisitions

PurposePost-merger integration (PMI) is driven by coevolving processes. By integrating the literature on acquisitions with that of knowledge networks, this paper highlights different reconstruction mechanisms for dual knowledge networks during PMI – namely, internal knowledge network coupling and external knowledge network embeddedness. This paper aims to examine their coevolutionary relationships with PMI.Design/methodology/approachA coevolutionary framework is tested using a latent growth model and cross-lagged models. The analysis is based on longitudinal data collected from 116 Chinese technology-sourcing overseas merger and acquisition firms.FindingsThis paper unearths a novel idea that variations in post-merger reconstruction of dual knowledge networks can explain why some acquirers increase the degree of integration faster than the others. The results show that the internal knowledge network coupling leads to more knowledge similarity and, in turn, causes a higher degree of integration. The external knowledge network embeddedness also causes higher relative network status of the acquirer, which consequently leads to a higher degree of integration. Furthermore, results from cross-lagged models confirm that an increase in the degree of integration positively influences subsequent changes in the internal knowledge network coupling and external knowledge network embeddedness, thus forming a coevolutionary relationship over time.Originality/valueThis paper responds to recent calls for more insights into the dynamics of PMI. By highlighting different reconstruction mechanisms for internal and external knowledge networks during PMI, this paper explains why it is important to understand PMI dynamics from a dual knowledge network perspective. This paper is the first to adopt a coevolutionary perspective and provide a more comprehensive dynamic framework between PMI and reconstruction of dual knowledge networks. Besides, this paper contributes to the research on emerging market multinational corporations’ cross-border merger and acquisition integration from a dynamic perspective, revealing the time effects of traditionally favored light-touch integration.

Research on Risks of Chinese Internet Enterprises' Overseas Mergers and Acquisitions Based on Tencent's Typical Case

Research on Risks of Chinese Internet Enterprises' Overseas Mergers and Acquisitions Based on Tencent's Typical Case

The Effects of Open Innovation Based on Mergers and Acquisitions on Innovative Behavior of Enterprises: Evidence From Chinese Listed Enterprises.

Finding the factors driving enterprise innovation behavior from multiple dimensions is of great significance for promoting enterprise innovation. Open innovation based on overseas mergers and acquisitions (M&A) has become one of the main ways for enterprises to obtain knowledge and technology. However, there is still no agreement on whether open innovation based on overseas M&A can promote innovation behavior of enterprises. Based on data from M&A transaction and enterprise patent of China’s Shanghai and Shenzhen A-share listed companies from 2011 to 2018, this study constructs a propensity score matching and difference-in-difference model from the perspective of innovation performance and innovation investment empirically studies the influence of open innovation mode based on overseas M&A on the innovation behavior of enterprises and finds that open innovation based on overseas M&A can significantly promote the innovation performance and innovation investment. Meanwhile dynamic effects test shows this promotion effect is sustainable; it reaches the maximum in the year of overseas M&A and decreases in the next two years. In addition, the impacts are heterogeneous due to enterprise ownership and enterprise technology intensity. The findings extends the scope of understanding innovation behavior of enterprises from overseas M&A and provide solid evidence of significant business implications for the promotion of entrepreneurial innovation.

Overseas M&A integration and industrial innovation: a study based on internal and external knowledge network reconfiguration

ABSTRACT Promoting home-country industrial innovation via overseas mergers and acquisitions (M&A) integration is crucial for latecomers. However, the transmission mechanism for innovation remains unclear. Taking the resource-based view, we apply network theory to illustrate this cross-level process. Based on technology-sourcing overseas M&A samples in China, a mediating effect model shows that with a lower resource similarity level, a higher resource complementarity level and a lower external network embeddedness, the acquirer should choose a lower integration degree to improve internal and external knowledge-network reconfiguration, thus benefiting home-country industrial innovation. Our findings help enrich overseas M&A research on enterprise’s dual-network embeddedness and help latecomers catch up.

Research on the Prevention of External Risks in Overseas Mergers and Acquisitions of the Mainland Chinese Enterprises

Research on the Prevention of External Risks in Overseas Mergers and Acquisitions of the Mainland Chinese Enterprises

Bilateral Investment Treaty and Overseas M&A of Chinese Companies：Evidence from a Quasi-natural Experiment

As an important legal document signed between two countries to promote and protect investment, bilateral investment treaties play an important role in bilateral international investment. This paper intends to answer the following questions: What is the impact of bilateral investment treaties on Chinese companies’ overseas mergers and acquisitions（M&A）? What is the impact mechanism? How should Chinese companies take advantage of the effect of bilateral investment treaties on overseas M&A, so as to expand the scale and scope of overseas M&A while promoting the success of M&A?Based on the progressive difference-in-difference model, this paper delves into the theoretical mechanism and impact of bilateral investment treaties on Chinese companies’ overseas M&A by using bilateral investment treaties as a quasi-natural experiment with the country panel data of 140 countries from 2004 to 2018. It comes to the following conclusions: Firstly, compared with countries that have not signed bilateral investment treaties, bilateral investment treaties have a significant positive effect on Chinese companies’ willingness to acquire overseas and successful M&A. Secondly, in terms of dynamic effects, bilateral investment treaties have a long-term effect on the promotion of Chinese companies’ overseas M&A, and their volatility has increased. Thirdly, the promotion effect of bilateral investment treaties is significantly heterogeneous. The promotion effect of bilateral investment treaties is more significant in Asia and Africa, stronger in high-quality countries and developed countries, and stronger in non-state-owned companies. Fourthly, the expansibility test shows that the quality of the text of bilateral investment treaties have a significant promoting effect on China’s overseas M&A. Fifthly, through the decomposition and quantification of the specific provisions of investment treaties, “Definition and Scope of Investment”“Fair and Equitable Treatment” and “Most Favored Nation Treatment” are the key provisions that affect the promotion of China’s overseas M&A in bilateral investment treaties. This paper enriches the research theory in the field of bilateral investment treaties and overseas M&A relations, provides policy revelations for Chinese companies’ overseas M&A and the new round of bilateral investment treaty practices, and contributes Chinese wisdom to global economic governance.In short, this paper contributes to the existing research in the following three perspectives: Firstly, it specifically examines the impact of bilateral investment treaties on the number of Chinese companies’ M&A cases and successful M&A cases in a more in-depth way. Secondly, it uses bilateral investment treaties as a quasi-natural experiment, and conducts an empirical research based on the progressive difference-in-difference model. It also explores the impact of the text quality of investment treaties, and examines the internal mechanism of bilateral investment treaties from the dimensions of investment definition and scope, fair and equitable treatment, national treatment, most-favored-nation treatment, expropriation compensation, umbrellas, and investment dispute settlement based on the specific terms of investment treaties. Lastly, it lays an important empirical foundation for deepening bilateral investment treaties and promoting overseas M&A by Chinese companies, as well as for building a scientific and reasonable bilateral investment treaty system and promoting the formation of a new pattern of comprehensive opening.

The Effects of Corporate Social Responsibility on Overseas Mergers and Acquisitions

This survey studies the effects of corporate social responsibility (CSR) on overseas mergers and acquisitions (overseas M&As) on acquirers’ corporate social responsibility (CSR) using a sample of Ghana multinational firms and MBA students. This study reveals that firms with overseas M&A activities experience an improvement in CSR performance during the post-acquisition period, and this positive effect is more distinctive when the acquisition of targets is from developed markets than from emerging or low-quality markets. Besides, acquirers significantly improve CSR performance following their overseas acquisitions, suggesting that acquirers initiate efforts to improve CSR performance to gain legitimacy in host countries. The study equally finds that host country legal origins, social norms, and the acquirers’ exposure to multiple jurisdictions hold the keys to improving the CSR performance of acquirers. The results appear robust and valid to various measures of CSR and are effective when endogeneity concerns are addressed. Further analyses disclose that overseas M&A firms with high CSR performance show greater CSR initiatives. Overall, our findings add to the field of literature on the influence of legal and social norm origins on shaping stakeholder-oriented practices by showing how overseas M&As may aid as a critical channel through which overseas acquirers bond themselves to the better CSR practices of the host countries. Keywords: Corporate Social Responsibility, Mergers and Acquisitions and Overseas Investment DOI: 10.7176/EJBM/13-6-15 Publication date: March 31 st 2021

Driving force of industrial technology innovation: coevolution of multistage overseas M&A integration and knowledge network reconfiguration

PurposeThe purpose of the paper is to examine the coevolutionary dynamics between multistage overseas mergers and acquisitions (M&A) integration and knowledge network reconfiguration and the impact of this coevolution on industrial technology innovation.Design/methodology/approachThis paper builds a coevolution analysis framework in stages and constructs structural equation models for empirical tests using the Chinese technology-sourcing overseas M&A events that occurred from 2001 to 2012.FindingsOverseas M&A integration and knowledge network reconfiguration are in a coevolutionary relationship, driving industrial technology innovation. The acquirer adopts initial integration degree that matches the resource relatedness between the acquiring and acquired parties, promoting initial industrial technology innovation through initial knowledge network reconfiguration. Initial knowledge network reconfiguration will feed back to the M&A integration decision in the mid-to-late stage through increasing knowledge similarity and narrowing network position difference. The higher the improvement of mid-to-late integration degree, the more it can drive mid-to-late industrial technology innovation through mid-to-late knowledge network reconfiguration.Research limitations/implicationsFuture research can accurately classify overseas M&A integration stages through case tracking and explore other network attributes.Practical implicationsPractical guidelines are provided for managers on how to implement a multistage overseas M&A integration strategy, optimize knowledge network reconfiguration and promote industrial technology innovation. Significant practical implications are presented, especially in academia, society and quality of life.Originality/valueDifferent from the previous research considering M&A integration as a single-stage decision, this paper emphasizes the dynamics of the M&A integration process and explores the coevolution mechanism of multistage overseas M&A integration and knowledge network reconfiguration.

CODAS methods for multiple attribute group decision making with interval-valued bipolar uncertain linguistic information and their application to risk assessment of Chinese enterprises’ overseas mergers and acquisitions

Bipolar fuzzy set theory has been successfully applied in some areas, but there are situations in real life which can’t be represented by bipolar fuzzy sets. However, all the existing approaches are unsuitable to describe the positive and negative membership degree an element to an uncertain linguistic label to have an interval value, which can reflect the decision maker’s confidence level when they are making an evaluation. In order to overcome this limit, we propose the definition of interval-valued bipolar uncertain linguistic sets (IVBULSs) to solve this problem based on the bipolar fuzzy sets and uncertain linguistic information processing models. In this paper, we extend the traditional information aggregating operators to interval-valued bipolar uncertain linguistic sets (IVBULSs) and propose some IVBUL aggregating operators. Then, we extend the CODAS method to solve multiple attribute group decision making (MAGDM) issues with interval-valued bipolar uncertain linguistic numbers (IVBULNs) based on these operators. An example for risk assessment of Chinese enterprises’ overseas mergers and acquisitions (M&As) is given to illustrate the proposed methodology.

How does integration affect industrial innovation through networks in technology-sourcing overseas M&A? A comparison between China and the US

Overseas mergers and acquisitions (M&A) integration is an effective way to promote home-country industrial innovation. However, much remains unknown about this mechanism. We provide a comprehensive understanding, by taking a resource-based view, focusing on the role of internal and external networks as bridge, and exploring the moderating effect of home-country institution. Based on 119 samples in China and 311 samples in the U.S. of technology-sourcing overseas M&A, structural equation model analysis reveals that in a more developed home-country institution, American acquirers’ appropriate integration matched with resource relatedness significantly improves internal network cohesion and external network position, promoting industrial innovation. In contrast, constrained by a less developed home-country institution, Chinese acquirers’ internal network cohesion improvement is only significant in low-degree integration matched with high-resource-complementarity and low-resource-similarity, and the mediating effect of external network position improvement is significantly weaker than that of American. Research conclusions provide insights into the catching-up of latecomers.