Publication Type

Journal Article

Version

acceptedVersion

Publication Date

10-2021

Abstract

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.

Keywords

Political corruption, Anti-corruption campaign, M&As, China

Discipline

Accounting | Asian Studies | Business Law, Public Responsibility, and Ethics | Corporate Finance

Publication

China Economic Review

Volume

69

First Page

1

Last Page

17

ISSN

1043-951X

Identifier

10.1016/j.chieco.2021.101677

Publisher

Elsevier

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1016/j.chieco.2021.101677

Download

Share

COinS