Political connection and M&amp;A performance: Evidence from China

Brahma, Sanjukta; Zhang, Jing; Boateng, Agyenim; Nwafor, Chioma

doi:10.1016/j.iref.2023.01.026

Cited by 17 publications

(5 citation statements)

References 109 publications

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“…As a result, firms' illegal acts can be timely penalized in areas with a high level of legal institutions. On the contrary, firms can mitigate the administrative penalties by relying on some informal institutions in the area with a low level of legal institutions, such as political connections with governments (Brahma et al, 2023). The formal system effectively fulfills its regulatory role when firms engage in more severe violations (Li et al, 2022; Warren, 2019).…”

Section: Resultsmentioning

confidence: 99%

Administrative penalties and corporate CSR disclosure strategies

Duan,

Zhang,

Meng

2024

Manage Decis Econ

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Corporate social responsibility (CSR) disclosure is an important way for firms to achieve social goals. As stakeholders pay more attention to CSR performance, the CSR report strategy has attracted academic attention. Prior studies have stressed the important role of positive CSR disclosure strategies in a firm's reputation and market value, but our study shows different findings. Using a sample of China's A‐share listed firms from 2008 to 2019, we find a significant negative correlation between administrative penalties and the use of pictures and tables in CSR reports, which is more significant for firms being penalized rather than individuals in firms. Investor attention and agency costs provide a mechanism explanation. Heterogeneity analysis shows that in regions with a low level of legal institutions, the effects of administrative penalties on the use of pictures and tables in CSR reports are more significant. Nevertheless, the seemingly negative disclosure strategy ultimately contributes to corporate value.

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Section: Resultsmentioning

confidence: 99%

Administrative penalties and corporate CSR disclosure strategies

Duan,

Zhang,

Meng

2024

Manage Decis Econ

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“…Furthermore, SOEs with political connections may gain excess monopoly profits and competitive advantages, which can increase their enterprise value (Sun & Zou, 2021). Higher levels of political connections can lead to greater benefits for enterprises (Brahma et al, 2023). In such cases, non‐state‐owned capital with profit motives may be more likely to participate in mixed ownership reform by leveraging the resources brought by political connections in SOEs.…”

Section: Additional Analysesmentioning

confidence: 99%

Does business strategy of the state‐owned enterprise affect the participation of non‐state‐owned capital?: Empirical evidence from China

Zhao,

2023

Manage Decis Econ

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How to improve the operational efficiency of state‐owned enterprises (SOEs) is an important issue facing emerging economies or developing countries. This study investigates whether and how business strategies of SOEs affect the participation of non‐state‐owned capital using Chinese enterprises from 2008 to 2019. The study finds that there is a positive effect of aggressive corporate strategy on the motivation of private capital to participate in mixed ownership reform. Mechanism tests have shown that prospector strategy increases the reform motivation of SOEs by boosting investment in technological and knowledge capital and financing demand and also increase the willingness of private enterprises to participate by increasing SOEs' value. Further research is found that when the SOEs are more politically connected, in commercial competition industries, and located in regions with cleaner governments, the effect of business strategy on the participation of non‐state‐owned capital is more significant. This study not only enriches relevant research on the factors influencing mixed ownership reform at the micro level but also provides valuable experience and reference for economic reforms in emerging markets and developing countries.

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“…The initial research sample for this study is comprises Ashare listed companies conducted mergers and acquisitions on the Shanghai and Shenzhen Stock Exchanges in China between January 1st, 2007 to December 31st, 2021. Keeping in mind the patterns of available literature [35][36][37][38], the present study employed the same criteria for sample selection. The sampling process for the data sample is as follows:…”

Section: Sample Selectionmentioning

confidence: 99%

“…BHAR reflects the return to an investor if they bought an acquiring firm's stock on acquisition announcement to a specified later date. The long-term returns are calculated monthly, compounding 36 months after the M&As, adjusted by the benchmark return, consistent with prior studies [38,44,45]:…”

Section: Long-term Stock Market Performancementioning

confidence: 99%

Market Mispricing Timing and Post-acquisition Performance: Evidence from Chinese A-share Firms

Zhang¹,

Teo²

2023

FBEM

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This study examines the impact of market mispricing timing on the short-term and long-term performance of acquiring firms in the context of China's capital market. Using a comprehensive dataset of A-share listed companies engaged in mergers and acquisitions (M&A) between 2007 and 2021, we investigate whether M&A activities conducted during periods of market overvaluation lead to enhanced short-term performance while failing to generate sustained long-term benefits. Our findings reveal that acquisitions executed during market overvaluation exhibit significantly improved short-term stock market performance, reflecting the alignment of merger announcements with optimistic investor sentiment. However, such positive effects on short-term performance do not extend to long-term outcomes. The study underscores the critical influence of market timing on the immediate post-acquisition performance of acquiring firms but highlights its limited impact on long-term financial and market performance. These insights contribute to a better understanding of M&A behavior within the Chinese capital market, demonstrating that while capitalizing on market mispricing can yield short-term advantages, sustainable long-term gains hinge on other factors beyond market timing.

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Political connection and M&A performance: Evidence from China

Cited by 17 publications

References 109 publications

Administrative penalties and corporate CSR disclosure strategies

Administrative penalties and corporate CSR disclosure strategies

Does business strategy of the state‐owned enterprise affect the participation of non‐state‐owned capital?: Empirical evidence from China

Market Mispricing Timing and Post-acquisition Performance: Evidence from Chinese A-share Firms

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