How does political uncertainty affect Chinese corporate M&A abroad? Evidence from the BRI scenario
by Zhiwei He; Yingbo Xu; Hongwei Ruan
European J. of International Management (EJIM), Vol. 23, No. 2/3, 2024

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.

Online publication date: Thu, 23-May-2024

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