Political connection and M&A performance: Evidence from China

Jing Zhang, Sanjukta Brahma, Agyenim Boateng, Chioma Nwafor

Research output: Contribution to conferencePaperpeer-review

Abstract

This study has examined whether political connections measured by politically connected CEOs could impact short-run announcement period and long-run post-merger performance of Chinese firms taking data from 2004-2017. The results show that political connection has a positive and significant impact of short-run returns of the acquiring firms and post-merger performance of the combined entity. Our results are robust across alternate measures of firm performance and alternate measures of political connection. Our results lend credence to network theory, that is political connections in China creates networking opportunities (Guanxi) that improve merger performance.
Original languageEnglish
Publication statusPublished - 2022

Keywords

  • mergers, network theory, grabbing hand or helping hand theory, political connections

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