Title: How does political uncertainty affect Chinese corporate M&A abroad? Evidence from the BRI scenario

Authors: Zhiwei He; Yingbo Xu; Hongwei Ruan

Addresses: Business School, Qingdao University, Qingdao 266061, China ' Business School, Qingdao University, Qingdao 266061, China ' Business School, Qingdao University, Qingdao 266061, China

Abstract: Not only does political risk in the host country affect MNEs' (multinational enterprises') overseas M&A, but political risk in the home country cannot be ignored either. We examine the impact of political uncertainty represented by the turnover of officials in home and host countries on overseas M&A by Chinese listed companies from 2007 to 2018 in the context of the Belt and Road Initiative (BRI). We find that the BRI significantly facilitates Chinese firms' overseas M&A, and this positive effect is reinforced by the political uncertainty caused by the turnover of local officials in China and mitigated by the political uncertainty caused by the turnover of leaders in the host country. Our findings provide solid evidence that political agent turnover affects firms' overseas investment activities, thus revealing the positive effects of the BRI.

Keywords: mergers and acquisitions; M&A; Belt and Road Initiative; political uncertainty; officer turnover.

DOI: 10.1504/EJIM.2024.138661

European Journal of International Management, 2024 Vol.23 No.2/3, pp.250 - 269

Received: 31 Dec 2021
Accepted: 11 Apr 2022
Published online: 23 May 2024 *

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