Why Different Acquirers Generate Different Firm Value From Cross-Border M&As: Evidence From Chinese Multinationals

Abstract

Multinationals from emerging markets have attracted worldwide attention with their prominent crossborder mergers and acquisitions (M&As). However, little is known about why emerging-market acquirers experience positive value creation through foreign M&A activity while many advanced country acquirers suffer value destruction. This study draws on institutional theory, the springboard perspective, and the asset exploitation and exploration perspectives to examine the critical determinants of firm value creation for Chinese acquirers. Analysis of data from a sample of Chinese firms over the period 2002–2019 shows unique outward M&A advantages held by Chinese multinationals. These companies benefit from tangible and intangible assets acquired from outward M&As in advanced and institutionally divergent economies. The findings suggest Chinese firms that use M&As to capture strategic assets create higher firm value than firms that are driven by traditional FDI motives.