The Role of Confucius Institutes and One Belt, One Road Initiatives on the Values of Cross-Border M&A: Empirical Evidence from China

Abstract

This study examines how national cultural policies such as Confucius Institutes and One Belt, One Road initiatives (BRI) affect the post-acquisition returns of Chinese cross-border mergers and acquisitions based on data from a sample of 192 transactions covering 2011 to 2015. We find that the cultural export of Chinese Confucius Institutes and the BRI exert a significantly positive impact on long-term acquirer returns, while cultural/institutional distance exerts a negative impact. Further evidence shows that Confucius Institutes and BRI mitigate the negative effect of cultural distance between merging firms. These results offer the first evidence that national cultural translation has substantial impacts on the long-run acquirer financial performance of cross-border mergers that decrease cultural institutional heterogeneity between countries.

To What Extent Has China Pursued its Cultural Diplomacy Strategy through the BRI since 2013?

“…This includes constructing and renovating museums, theatres, cultural centres, and heritage sites. These infrastructure developments not only improve cultural accessibility but also serve as platforms for cultural exchanges, performances, and exhibitions, thereby bolstering cultural diplomacy efforts (Jung et al, 2020). The Chinese government has also actively promoted cultural diplomacy and educational cooperation through these cultural infrastructures.…”

Industrial Policy’s Effect on Cross-Border Mergers’ Decisions—Theoretical and Empirical Analysis

“…From the current research on financing constraints and cross-border M&As, scholars agree that financing constraints may hinder and restrict firms' cross-border M&As, and the alleviation of financing constraints will promote cross-border M&As [84]. Firms with strong financing capacities and firms with low financing constraints are more inclined to choose cross-border M&As.…”

The Impact of the “Belt and Road” Initiative on Accounting Conservatism of Energy‐Intensive Enterprises under the Low‐Carbon Background

“…e previous study on the four influencing factors of accounting conservatism, including contract, tax, litigation, and supervision, found that the debt contract and compensation contract in the contract factor, the tax burden corresponding to the tax factor, and the legal system corresponding to the litigation and regulatory factors can all effectively explain the differences in the quality of accounting information of enterprises. Based on existing studies [28][29][30], it can be argued that the BRI influences the energy-intensive corporate accounting decisions through four channels that affect corporate debt contracts, executive compensation, the tax burden, and the legal environment.…”