Sino-US Strategic Competition and Cross-Border M&As by Chinese Enterprises: Evidence from Public Opinion Big Data

This study investigates the effect of bilateral political relations on cross-border M&As in the context of Sino-US strategic competition. Based on 996 cross-border M&A cases of Chinese enterprises over the period 2001-2020, our econometric analysis reveals that, in general, Sino-US strategic competition reduces the completion rate of Chinese enterprises' cross-border M&As. This effect is stronger for M&As in strategic industries and targets owned by government, suggesting direct government intervention. Moreover, M&As with higher investment irreversibility or in B2C industries are more exposed to this negative impact, suggesting investor and consumer caution with declining political affinity. However, in the long run, such a competition contrarily contributes to the improvement of the performance of Chinese enterprises. These findings challenge policymakers and scholars with a new emerging M&A theoretical framework regarding institutional uncertainty and risk.