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Hometown-based business associations and M&As performance: Evidence from China

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  • Yang, Jibin
  • Jia, Fansheng
  • Li, Shanmin
  • Wu, Wenfeng

Abstract

This paper examines the impact of hometown-based business associations (HBAs), formal social networks constructed based on members sharing a hometown, on the cross-province M&As performance of Chinese A-share listed private firms. We find that HBAs significantly increase firms' cross-province M&As performance. The positive association between HBAs and M&As performance is more pronounced in the target provinces with a lower level of marketization, underdeveloped intermediary organization markets, and limited access to information. The findings suggest that information is an important channel through which HBAs improve M&As performance. Moreover, HBAs are substitutes for informal social networks. Our results are robust to various endogeneity checks.

Suggested Citation

  • Yang, Jibin & Jia, Fansheng & Li, Shanmin & Wu, Wenfeng, 2022. "Hometown-based business associations and M&As performance: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:pacfin:v:73:y:2022:i:c:s0927538x22000397
    DOI: 10.1016/j.pacfin.2022.101744
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    Cited by:

    1. Chen, Jing & Hu, Peiwen & Liu, Shan & Liu, Xinghe, 2024. "Too scared to make mistakes at home: CEO hometown identity and corporate risk-taking," Research in International Business and Finance, Elsevier, vol. 70(PB).
    2. Yu, Hong & Zhang, Muyang & Zhu, Ruolu, 2022. "Local educational experiences of executives, school geographical relationship and trade credit: Evidence from listed firms in China," Pacific-Basin Finance Journal, Elsevier, vol. 76(C).
    3. Chen, Wenchuan & Liu, Yu & Liu, Siyi & Chen, Yugang & Zhang, Pengdong, 2024. "The governance effects of social media engagement on M&A outcomes: Evidence from China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).
    4. Ren, Meixu & Zhao, Jinxuan & Zhao, Jingmei, 2023. "Why is it difficult for Chinese companies to operate across regions in China?—Evidence from zombie companies," International Review of Financial Analysis, Elsevier, vol. 87(C).

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    More about this item

    Keywords

    Hometown-based business associations; Formal social networks; M&As;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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