This paper examines how economic policy uncertainty (EPU) affects mergers and acquisitions (M&As) between companies with different levels of financing constraints. Existing literature overlooks the interactive effect of EPU and financing constraints on M&As, and empirical evidence regarding EPU's influence on financially constrained firms remains limited. China's unique ownership structure provides a valuable context for this analysis, as state-owned enterprises (SOEs) face fewer financing constraints than private firms. Using a 2007-2021 sample of Chinese listed state-owned enterprises (SOEs) and private companies, we find that high EPU decreases the likelihood of private firms acquiring SOEs, while increases the likelihood of private firms being acquired by SOEs. These results suggest that under high EPU, financially constrained firms experience greater survival pressure, limiting their capacity to alleviate constraints by acquiring less-constrained targets. Conversely, less-constrained firms enhance their bargaining power and are more likely to acquire financially stressed counterparts. EPU facilitates control transfers from high-constraint to low-constraint firms, contributing to long-term market returns and improving financial market allocation efficiency. Our study contributes to the literature by shedding light on how EPU shapes divergent M&A behaviors based on firms’ financing constraints.

This paper examines the impact of green mergers and acquisitions (M&As) on firms’ transition to green exports. We develop a “Technology-Qualification” theoretical framework and conduct the empirical analysis using a matched dataset of Chinese listed manufacturing firms and customs records. The findings show that green M&As significantly promote firms’ green exports, and this effect remains consistent across a series of robustness test. Mechanism analysis reveals that green M&As promote green exports through two key channels: green innovation spillovers and green qualification spillovers. Further heterogeneity analysis indicates that the positive impact of green M&As on green exports is more pronounced among firms with stronger operational performance, weaker green foundations, and those involved in processing trade. In addition, green M&As not only stimulate green exports but also prevent the entry of polluting products and reduce the exit of green product, thereby driving a green-oriented dynamic restructuring of firms’ export structure. This paper offers micro-level insights into how firms can navigate the dual challenges of enhancing green production capabilities and overcoming barriers to green trade during their transition to green exports.

This paper investigates whether regional negative public sentiment associated with extreme non-financial social shocks (e.g., violence or crime) will affect the resident firms’ M&A announcement return. Using a sample of 3,200 M&A deals in China, our empirical results consistently show that M&A announcement return is significantly lower after the firm’s headquarter city has experienced negative social shocks. We further find that better CSR performance helps to mitigate the impact of these negative shocks. Overall, we show that firm operations will be largely affected by the resident environment and location, and better CSR performance acts as an effective risk management strategy.

Using Chinese publicly listed firms from 2007 to 2020, this study empirically explores the impact of non-controlling shareholders’ network on the corporate excess goodwill. We find that the centrality of non-controlling shareholders’ network significantly decreases the excess goodwill from mergers and acquisitions, indicating that non-controlling shareholders’ network can restrain the goodwill bubbles. Moreover, the inhibitory effect of non-controlling shareholders’ network on excess goodwill stems from pressure-resistant institutional investors and individual investors. This effect is achieved through the information effect, resource effect, and governance effect. Furthermore, this inhibitory effect is more pronounced in firms located in less developed regions and legal environments, and firms with lower audit quality. In conclusion, non-controlling shareholders’ network plays a positive role in the restriction of excess goodwill in listed companies.

This study investigates the impact of non-controlling shareholders' network on corporate excess goodwill using Chinese publicly listed companies from 2007 to 2020. We find that a stronger centrality of non-controlling shareholders' network leads to a significant decrease in excess goodwill resulting from mergers and acquisitions. This implies that the non-controlling shareholders’ network has a significant inhibitory effect on the occurrence of goodwill bubbles. Mechanism analysis finds that non-controlling shareholders' network can inhibit excess goodwill thorough information effect, resource effect, and governance effect. Furthermore, this inhibitory effect is attributed to pressure-resistant institutional investors and individual investors, and is more pronounced in firms located in less developed intermediary market and legal system environment, as well as firms with lower audit quality. In summary, the non-controlling shareholders' network plays a positive role in curbing excess goodwill in listed companies.

Capital misallocation is a crucial factor that hinders the high-quality development of the capital market. Taking mergers and acquisitions (M&A) cases of Chinese listed companies from 2007 to 2019 as samples, this study finds that there is a mismatch between the target firm’s profit quality and the M&A premium. Moreover, based on the dual perspective of acquirer and target motivations, this study demonstrates that the target firm’s insufficient motivation to improve its information quality is the primary cause of a capital mismatch. Factors that can enhance the motivation of the target, such as improving financial services and facilitating labour flow, are the cure for capital misallocation. It is a crucial study to understand China’s capital misallocation and of great theoretical and practical significance to understand the combination of efficient markets and effective governments in emerging markets.

Distinct from existing studies on general institutional investors and institutional investor cliques, this study examines how common institutional owners, who simultaneously hold more than 5% equity blocks in at least two publicly traded firms within the same industry, influence firms’ bad mergers and acquisitions (M&As) in China. Contrary to the “conspiracy tort” view, according to which common institutional owners are more likely to vote for bad M&A deals to pursue internalized gains from industry portfolios (Antón et al., 2022b), our results strongly support the “synergy governance” view, according to which common institutional owners perform more actively and effectively in monitoring against bad M&As and improving M&A quality. There is further evidence that common institutional owners with greater peer linkages and industry power and longer-term holdings are more likely to oppose deals with negative acquirer returns. Finally, we find that the effect of common institutional ownership on M&As is more pronounced among firms with stronger earnings management, moderate stock return synchronicity, less management shareholding and higher management expenses. The results are consistent with the “synergy governance” hypothesis whereby common institutional owners are able to leverage their advantages of industry information and supervisory experience to improve the information environment and corporate governance of the firms they hold. Overall, in China’s market, common institutional owners play an active external governance role and effectively improve M&A quality.

This paper examines the association between acquisition performance commitment and earnings management in an emerging market where investor protection mechanisms are not well established. Based on a sample of acquisition transactions by listed firms in China during 2008-2017, we find evidence that firms committed to certain performance targets in acquisition transactions tend to engage in earnings management to meet their commitments. This phenomenon is more pronounced at the later stage of the commitment period. Further, the positive relation between performance commitment and earnings management is attenuated by a stronger governance structure. Finally, we find firms that managed to just meet performance targets experience worsened accounting-based and market-based performances and higher probability of goodwill impairments immediately after the commitment period. This paper contributes to the acquisition literature by providing evidence from an emerging market of post-contractual opportunistic behavior.

This study examines the effects of acquirer characteristics, information asymmetry on method of payment of Chinese acquirers based on a sample of 1370 mergers and acquisitions that occur between 1998 -2008. Using both Buy and Hold Abnormal Returns (BHAR) and Calendar Time Abnormal Returns (CTAR) approaches, we find that Chinese acquirers experience pre-acquisition abnormal returns ranging from 14.29%-121% over the period 12-36 months prior to the acquisition relative to 3 different portfolio benchmarks. In the pre-bid period, acquisitions financed by shares outperform acquisitions financed by cash. However, in the post-acquisition period, we document no significant difference between cash- and equity-financed acquisitions. We document a number of factors that determine the method of payment by Chinese acquirers: acquirer market value, Tobin’s Q, state ownership and leverage have significant effects on the method of payment.

This study examines how corporate governance influences short-term and long-term bidder returns from China’s domestic mergers and acquisitions during 2001-2010. We examine a range of corporate governance measures covering ownership structure, board structure, insider ownership and managerial incentives while controlling for bidder and deal characteristics. Our initial results from events analyses show that market responses differ in ways which suggest a difference in how the market’s assessment of share price from the perspectives of short run and long run. Bidders obtain significant positive abnormal returns over the five-day event period but suffer significant wealth losses for two years following the deal completion. Our further analyses on factors driving the price difference show that executive ownership (positive) and state ownership (negative) exert opposite effects on the announcement period returns. The returns further differ by way of payments with positive (negative) effects from stock (cash) financing. Our long-term regression analyses show that the positive impact of executive ownership remains. Independent directors record a negative effect on abnormal returns. Nevertheless, board independence measured by the composite corporate governance index exerts a significant, positive effect on shareholder wealth. Our study highlights the need for the state to accelerate the share structure reform and formulate policies that encourage executive ownership and sound corporate governance.