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The Cross-Border Mergers and Acquisitions of Local State-Owned Enterprises: The Role of Home Country Government Involvement

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  • Qiuyang Gu

    (Department of Modern Business Research Center, Zhejiang Gongshang University, Hangzhou 310018, China
    School of Management Science & Engineering, Zhejiang Gongshang University, Hangzhou 310018, China
    School of Business Administration, Zhejiang Gongshang University, Hangzhou 310018, China)

  • Chunhua Ju

    (Department of Modern Business Research Center, Zhejiang Gongshang University, Hangzhou 310018, China
    School of Management Science & Engineering, Zhejiang Gongshang University, Hangzhou 310018, China
    School of Business Administration, Zhejiang Gongshang University, Hangzhou 310018, China)

  • Fuguang Bao

    (Department of Modern Business Research Center, Zhejiang Gongshang University, Hangzhou 310018, China
    School of Management Science & Engineering, Zhejiang Gongshang University, Hangzhou 310018, China
    School of Business Administration, Zhejiang Gongshang University, Hangzhou 310018, China)

Abstract

Existing literature tends to treat enterprises as a whole when measuring government intervention. However, in Chinese region-specific institutional development, ultimate control (i.e., local government) tends to control multiple enterprises. This paper considers the enterprises controlled by the same ultimate controller as a portfolio, which is used to measure government intervention by comparing the differences of the enterprises in the portfolio. This paper uses the data of Chinese listed local state-owned enterprises (LSOEs). and we assess whether local state ownership benefits or offsets LSOEs’ cross-border mergers and acquisitions (CBM & A) activities. We propose a new measurement of government intervention to explain the mechanisms through which government influences the cross-border mergers and acquisitions of local SOEs. The experimental results show that government intervention and region-specific marketization institutional development negatively moderate the effect of government internationalization subsidies and government intervention on CBM & A separately. However, government internationalization subsidies, government intervention, and region-specific marketization enhance the CBM & A effect of state ownership separately. This study explores the benefits of government involvement in local SOEs. The value of this paper is to provide a novel perspective, including the intermediary effect of government intervention and the market environment.

Suggested Citation

  • Qiuyang Gu & Chunhua Ju & Fuguang Bao, 2020. "The Cross-Border Mergers and Acquisitions of Local State-Owned Enterprises: The Role of Home Country Government Involvement," Sustainability, MDPI, vol. 12(7), pages 1-23, April.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:7:p:3020-:d:343452
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