This study examines the economic consequences of China’s Three-Red-Lines policy, introduced in 2021 to cap real estate developers' leverage by imposing strict thresholds on debt ratios and liquidity. Developers breaching these thresholds experienced sharp declines in financing, land acquisitions, and financial performance. Privately owned developers(POE) are hit harder than state-owned firms (SOE), with larger drops in sales and higher default risk. Using granular project-level data, we show that the policy reduces developer sales primarily by curtailing new-project supply: breached developers launch fewer projects. On the demand side, homebuyers reallocate purchases from privately owned developers to SOEs, further widening the POE-SOE gap. The policy also reduced local governments’ land-transfer revenues and increased reliance on local government financing vehicles (LGFVs) for land purchases. These LGFV-acquired parcels exhibit very low subsequent development rates, which may increase local governments’off-balance-sheet debt risks.

Purpose The study investigates the impact of government intervention policy of capital markets (“National Team”) on firms’ sustainable management, i.e., green mergers and acquisitions (GMAs) in China, aiming to understand how such interventions influence corporate investment activities amidst a growing focus on green transition. Design/methodology/approach The research employs a dynamic analysis of quarterly data from Chinese companies (2014 Q1 to 2022 Q4), utilizing identified strategies, such as double machine learning-DID and multiple panel data regressions to assess the effects of government intervention on GMAs, and examines potential economic channels like liquidity, market stabilization, and informativeness. Findings The study finds that increased government intervention via direct stock purchases significantly boosts both the number and amount of GMAs, with economic significance of 23% and 45%, respectively. It identifies liquidity, market stability, and informativeness efficiency as underlying economic channels for this effect. Practical implications The findings suggest that government interventions can enhance corporate investment in green sectors, guiding firms to align strategies with sustainability goals. This can inform policymakers regarding the effectiveness of direct stock purchases in fostering a green economy, especially for large emerging countries. Social implications By promoting GMAs, government interventions contribute to green innovation and energy transition, ultimately benefiting society through enhanced environmental sustainability and compliance with eco-friendly regulations. Originality/value This research uniquely documents the direct effects of government stock purchases on corporate green financial activities, particularly GMAs, in a Chinese context characterized by tight credit, thereby expanding the understanding of government intervention in emerging markets.

This study investigates the impact of RegTech adoption in the M&A regulatory review process on deal performance. Leveraging the staggered implementation of the SOEs Online Supervision System (SOSS) by China’s State-Owned Assets Supervision and Administration Commission (SASAC) across its central and 31 provincial offices from 2018 to 2021, we find that SOSS directly enhances SASAC’s decision-making efficiency and improves its capacity to screen and approve higher-quality M&A deals. More importantly, SOE-led M&A transactions exhibit higher announcement returns as well as improved long-run stock and operating performance following the system’s implementation. The positive impact of SOSS is more pronounced for acquirers with stronger technological infrastructure, in transactions characterized by low transparency and weak governance, and in provinces with more stringent external scrutiny. Overall, by addressing regulator-firm information asymmetry and reinforcing managerial accountability, SOSS improves regulatory effectiveness in overseeing major investment activities among SOEs.

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 study explores the anchoring effect of previous bid premiums on acquirers’ bidding behavior in serial acquisitions. We demonstrate that, after controlling for deal characteristics, learning, and unobserved factors, the current bid premium is positively correlated with the acquirer’s previous bid premium. The strength of this anchoring effect diminishes with longer time intervals between acquisitions and increases with the industry similarity of targets. Notably, it remains unaffected by the acquirer’s state ownership or acquisition frequency. Additionally, the anchoring effect is less pronounced during periods of high economic uncertainty and can reverse following a change in the acquirer’s CEO. Our findings suggest that serial acquisitions are interrelated events, challenging the notion that each bid is an isolated occurrence. This research provides insights into the underperformance of serial acquirers compared to single acquirers and the declining trend in announcement returns across successive deals.

This study examines the economic consequences of China’s Three-Red-Lines policy—introduced in 2021 to cap real estate developers’ leverage by imposing strict thresholds on debt ratios and liquidity. Developers breaching these thresholds experienced sharp declines in financing, land acquisitions, and financial performance, with privately-owned developers disproportionately affected relative to state-owned firms. Using granular project-level data, we document significant drops in sales and a demand shift from private to state-owned developers. The policy also reduced local governments’ land sale revenues, prompting greater reliance on hidden local government financing vehicles for land purchases. The policy induced broad structural changes in China’s housing and land markets.

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.

We examine the impact of bankruptcy court establishment (BCE) on corporate acquisition activities using hand-collected data of city-level BCE in China from 2008 to 2020. The results show that BCE promotes corporate acquisition activities largely due to mitigated information asymmetry and decreased deal inefficiency. Our results highlight the important role of judiciary reform in corporate acquisition decisions in emerging markets.