Local political corruption and M&As
We examine the relation between local political corruption and firms' cross-province M&As using provincial-level data on corruption in China. The results show that firms in more corrupt regions are less likely to engage in cross-province M&As. Further analyses reveal that the effects of...
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Main Authors: | , , , , |
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Format: | text |
Language: | English |
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Institutional Knowledge at Singapore Management University
2021
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Online Access: | https://ink.library.smu.edu.sg/soa_research/1960 https://ink.library.smu.edu.sg/context/soa_research/article/2987/viewcontent/LocalCorruption_av.pdf |
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Institution: | Singapore Management University |
Language: | English |
Summary: | We examine the relation between local political corruption and firms' cross-province M&As using provincial-level data on corruption in China. The results show that firms in more corrupt regions are less likely to engage in cross-province M&As. Further analyses reveal that the effects of local corruption on the probability of cross-province M&As are stronger when corrupt officers have greater impeding benefits or lower impeding costs. Meanwhile, Both ex-ante intervention and ex post punishment are important channels through which corrupt officers hinder firms' cross province M&As. Moreover, informal institutions, such as social capital and informal networks can help to alleviate the negative impact of political corruption on firms' cross-province M&As. Our findings show that in the context of highly government intervention, cross-province M&As not only cannot be an effective channel to shield from expropriation, but are themselves highly distorted and lead to significant economic efficiency losses. |
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