China's OFDI policy announcements and cross-border M&A

Abstract

PurposeThis paper aims to enhance the understanding of the role of Chinese outward foreign direct investment (OFDI) policies for cross-border merger and acquisition (M&A) by distinguishing between coercive and noncoercive OFDI policies.Design/methodology/approachThe dependent variable is the count of completed M&A transactions, measured monthly. Due to the nature of the study’s data, the author performs a zero-inflated negative binomial (ZINB) regression.FindingsSeparating between coercive and noncoercive policies, the author finds that the latter type shows a stronger supportive effect on the count of M&A deals. Considering firm ownership, the study’s results reveal that announcements of coercive policies have a weaker effect on cross-border M&A for state-owned enterprises (SOEs) than that for private-owned enterprises (POEs). For local SOEs (LSOEs) and central SOEs (CSOEs), this difference becomes even larger with noncoercive policy announcements. The influence on M&A of both policy types gets partially replaced with increasing internationalization experience.Originality/valueCombining institutional theory with policy change theory, the author argues that international business (IB) research on policy change needs to consider the integration of theoretical policy-level approaches to catch the effects of policy change on firm internationalization appropriately. The findings of the study support this argument by highlighting that the policy effect differs by policy type.

The uneven geography of real estate investment by Mainland Chinese state-owned and private enterprises in the U.S.: Local market conditions, migration, and ethnic networks

“…A major reason for such differences may be that PEs are more sensitive to market conditions than SOEs. PEs also receive relatively limited financial support compared to SOEs and are more vulnerable to domestic competition and investment uncertainties (Li and Ding, 2017;Utesch-Xiong, 2021).…”

“…Taken together, these results further confirm the important role of ethnic networks in promoting Mainland Chinese FDIRE, especially Chinese PEs. PEs are not treated in the same manner as SOEs, since PEs possess less credit and fewer loans and have less access to supply networks (Li and Ding, 2017;Morck et al, 2008;Utesch-Xiong, 2021). These limitations make them more vulnerable to foreign competition and investment risks and lead them to attach relatively more importance to social networks, both to secure intermediaries and potential homebuyers and investors.…”

Time‐to‐completion for mergers and acquisitions in the food and agribusiness industry

“…As M&As can make an industry less competitive (Gomes‐Casseres, 2018) by increasing the market share of the acquirer, regulators seek to protect public interests while supporting economic growth and industry investments, identified in the Harvard business review. The second is international cross‐border regulations (Utesch‐Xiong, 2021). Acquirers are likely to face added regulatory scrutiny in foreign markets due to bureaucracy, self‐interest/dealing, and the desire to protect domestic firms (Bittlingmayer & Hazlett, 2000).…”

Complementary Development between China and Sub-Sahara Africa: Examining China’s Mining Investment Strategies in Africa

“…Globalization has been regarded as an effective way to re-organize production factors (labor and capital), to increase those factors' productivity through international trade and global investment and to speed up the investing country's economic development [10][11][12][13]. Utesch-Xiong [14] studied China's foreign direct investment policies in transnational acquisition, suggesting that China's global investment is composed of both private enterprise-led and government-led investments, but is primarily dominated by government-led investments. In the past decade, China Sustainability 2021, 13, 11678 2 of 19 has intensified its OFDI all over the world after it launched the Belt and Road Initiative (BRI)-sometimes called the One Belt, One Road (OBOR) initiative [15].…”

“…In the past decade, China Sustainability 2021, 13, 11678 2 of 19 has intensified its OFDI all over the world after it launched the Belt and Road Initiative (BRI)-sometimes called the One Belt, One Road (OBOR) initiative [15]. Central Asia is one of the primary spots of interest for China's OFDI during this period because the Belt and Road Initiative started from the ancient "Silk Road" that connects China and Europe through central Asia [14,[16][17][18]. Africa is a strategic location for China's OFDI considering the abundant natural resources in this continent [19].…”