Huang, Chenghao, Jin, Zhi, Tian, Siyang and Wu, Eliza (2023) The real effects of corruption on M&A flows: evidence from China’s anti-corruption campaign. Journal of Banking and Finance, 150:106815. pp. 1-16. ISSN 0378-4266 (doi:https://doi.org/10.1016/j.jbankfin.2023.106815)

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Abstract

We exploit the public enforcement of the anti-corruption campaign across China to identify a causal role of political corruption in corporate takeover flows through a difference-in-differences (DID) analysis. We find that a reduction in corruption increases cross-region takeover activities by 40% and that deal volume more than doubles. Further analyses reveal that treatment effects are more evident for non-SOEs, politically unconnected acquirers, and acquirers that are less corrupt ex ante. We also show that the impact of the anti-corruption campaign is more pronounced in segmented cities where corruption practices are more entrenched. The reduction in corruption leads to higher bidder returns, improves post-acquisition performance, and markedly strengthens local economic development. The evidence indicates that the anti-corruption campaign was effective in attracting inbound corporate investments and supporting economic growth.

Item Type:	Article
Uncontrolled Keywords:	takeovers; corruption; institutional quality; corporate investment; real economy
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HC Economic History and Conditions H Social Sciences > HJ Public Finance
Faculty / School / Research Centre / Research Group:	Faculty of Business Faculty of Business > Department of Accounting & Finance Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA)
Last Modified:	14 Mar 2023 15:14
URI:	http://gala.gre.ac.uk/id/eprint/38791

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