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Ningyue Liu
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Publisher: Journals Gateway
Asian Economic Papers (2013) 12 (3): 41–57.
Published: 01 October 2013
Abstract
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This paper examines the impact of political connections on corporate mergers and acquisitions (M&As) behavior using data from companies listed in Chinese equity markets during the period 1998 to 2010. Our empirical results indicate that firms with political connections have a greater probability of engaging in M&As and tend to engage in larger-scale M&As. The impact of political connections on corporate M&As is mainly realized via government intervention in state-owned enterprises (SOEs). The paper also investigates the impact of political connections on M&A performance, demonstrating a significantly negative impact when SOEs are involved but a significantly positive impact when non-SOEs are involved. The findings of this paper suggest that the political connections of Chinese listed firms have a strong influence on M&A activities and performance.