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State ownership, prior experience and performance: a comparative analysis of Chinese domestic and cross-border acquisitions

Du, Min; Kwabi, Frank; Yang, Tianle


Frank Kwabi

Tianle Yang


Drawing on three theoretical frameworks, this paper aims to examine the effects of state-owned enterprises (SOEs) and the interaction between SOEs and prior acquisition experience of Chinese domestic and cross-border acquirers.

Using a sample of 4,116 firms consisting of 3,939 domestic mergers and acquisitions (M&As) and 177 cross-border M&As over the period 2004–2017, this study adopts both accounting- and market-based performance measures, namely, return on assets, return on equity and buy-and-hold abnormal return to analyse the effects of SOEs and the interaction between SOEs and prior acquisition experience on acquirers’ performance.

First, this paper finds SOEs to exert a positive influence on acquirer performance, contrary to agency theory but in line with the resource-based view. However, the positive relationship between SOEs and performance appears more pronounced for domestic M&A compared to cross-border M&As. Second, this study also finds prior acquisition experience and the combined effect of SOE and prior acquisition experience to have a positive and significant bearing on performance.

Research limitations/implications
The limitation of this study is the lack of cross-border M&A data with all the relevant information compared to domestic M&A. Thus, the cross-border M&A sample appears lower compared to the domestic M&A sample.

Practical implications
The results imply that the moderating role of prior acquisition experience on the relationship between SOEs and performance appears to be crucial for cross-border M&A performance compared to domestic M&A.

The findings of this study show SOEs increase performance, contrary to the widely held view based on agency theory that SOEs are inefficient.

Journal Article Type Article
Acceptance Date Jul 1, 2021
Online Publication Date Jul 16, 2021
Publication Date Aug 3, 2021
Deposit Date Dec 10, 2021
Journal International Journal of Accounting & Information Management
Print ISSN 1834-7649
Electronic ISSN 1834-7649
Publisher Emerald
Peer Reviewed Peer Reviewed
Volume 29
Issue 3
Pages 472-491
Public URL