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How bilateral investment treaties affect cross-border mergers and acquisitions: Novel evidence from China's internationalization

Author

Listed:
  • Han, Yonghui
  • Cheng, Hao
  • Wang, Hao

Abstract

Utilizing a comprehensive dataset of China and 127 host economies from 2004 to 2019 at both national level and firm level, we investigate how bilateral investment treaties (BITs) between China and global economies affect China's outbound cross-border mergers and acquisitions (CBMA). Our results demonstrate a positive effect of BITs on CBMA and such a promoting effect varies across host countries with different institutional and economic settings. While the most-favored-nation clause and umbrella clause are the underlying mechanisms accounting for the incentives of CBMA in the stage of pre-acquisitions, the expropriation and compensation clause drives the successful rate of CBMA. Further, non-state-owned enterprises display stronger incentive than state-owned enterprises.

Suggested Citation

  • Han, Yonghui & Cheng, Hao & Wang, Hao, 2025. "How bilateral investment treaties affect cross-border mergers and acquisitions: Novel evidence from China's internationalization," Emerging Markets Review, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:ememar:v:65:y:2025:i:c:s1566014124001304
    DOI: 10.1016/j.ememar.2024.101235
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    More about this item

    Keywords

    Bilateral investment treaties; Cross-border mergers and acquisitions; Text analysis;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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