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Does institutional distance affect cross-border acquisitions of China’s multinational companies?

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  • Kevin Christoper

    (Management Program, Faculty of Economics and Business, University of Pembangunan Nasional Veteran Jakarta, DKI Jakarta, Indonesia)

  • Ardhiani Fadila

    (Management Program, Faculty of Economics and Business, University of Pembangunan Nasional Veteran Jakarta, DKI Jakarta, Indonesia)

Abstract

This paper aims to examine the effect of institutional distance on the level of equity ownership. The sampling technique in this research used a purposive sampling technique. The sample of this research is cross-border acquisition transactions between Chinese multinational companies and target countries in the Southeast Asia region in the 2015 – 2019 period; thus, the total sample of this research is 32 transactions. The analysis technique in this study was Multiple Linear Regression with the Ordinary Least Square (OLS) model. The main finding of this study demonstrates that economic and geographical distance partially affect the level of equity ownership significantly. Meanwhile, administrative distance does not partially affect the level of equity ownership of the target company by Chinese multinational companies. Key Words:cross-border acquisition, institutional distance, level of equity ownership

Suggested Citation

  • Kevin Christoper & Ardhiani Fadila, 2022. "Does institutional distance affect cross-border acquisitions of China’s multinational companies?," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(7), pages 168-177, October.
    • Handle: RePEc:rbs:ijbrss:v:11:y:2022:i:7:p:168-177
    DOI: 10.20525/ijrbs.v11i7.1998
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    References listed on IDEAS

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    1. Heather Berry & Mauro F Guillén & Nan Zhou, 2010. "An institutional approach to cross-national distance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(9), pages 1460-1480, December.
    2. Peter J Buckley & L Jeremy Clegg & Adam R Cross & Xin Liu & Hinrich Voss & Ping Zheng, 2009. "The determinants of Chinese outward foreign direct investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(2), pages 353-354, February.
    3. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
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