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Purpose The purpose of this paper is to empirically examine the relationships between acquirer size and performance outcomes of the different process of acquisition in the Chinese context and the moderating effect of political connections on the size-performance relationship. Design/methodology/approach Building upon agency theory, the paper examines the relationship between acquirer size and acquisition announcement returns to find whether the acquirer size effect exists in China. Moreover, the paper investigates whether large firms can perform better in the long run arising from scale economy. Finally, the paper examines the moderating effect of political connections on the size-performance relationship. Accounting for the complexity of political connections in China, the paper uses two methods to capture political connections. Findings The paper finds that acquirer size plays a significant negative role on announcement returns, suggesting that the acquirer size effect also exists in China. However, acquirer size has a significant positive impact on long-term performance, indicating that large acquirers perform better in the integration process. Although no evidence shows that political connections can bring some off-setting benefits to acquirer size effect argued by Humphery-Jenner and Powell (2014), political connections, indeed, have a positive effect on mergers and acquisitions (M&As) announcement returns. Originality/value The paper contributes to the corporate characteristic, political connections and M&A performance literature. Due to agency problem and scale economy, the effect of firm size on acquisition performance varies with the stage of M&A. Political connections can bring some benefits to M&A deals.

This study investigates the impact of Chief Executive Officer (CEO) succession on a firm's financial constraints. Using panel data consisting of CEO turnover and non-turnover cases of listed companies in China, we find that new CEOs play a significant role in alleviating a firm's financial constraints. Specifically, the level of cash holdings, the investment to cash flow sensitivity, and the cash to cash flow sensitivity all decline following a new CEO's succession. These effects are stronger in cases where the turnovers are forced and the firms are more financially constrained.