Resources Science ›› 2020, Vol. 42 ›› Issue (9): 1788-1800.doi: 10.18402/resci.2020.09.13

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Location choice of Chinese resource enterprises’ cross-border mergers and acquisitions: A perspective from institutional quality of host countries

YANG Bo(), WAN Xiaowen(), HU Mengyuan   

  1. School of Economics, Zhongnan University of Economics and Law, Wuhan 430073, China
  • Received:2019-11-22 Revised:2020-08-25 Online:2020-09-25 Published:2020-11-25
  • Contact: WAN Xiaowen E-mail:yangbo21cn@163.com;xiaowen_wan@sina.cn

Abstract:

With the development of the Chinese economy, the supply of some resources is insufficient. Therefore China’s resource enterprises hunt for natural resources by cross-border mergers and acquisitions (cross-border M&A), which occurs in many host countries with different institutional quality. Based on the perspective of host country institutional quality, this study examined the influence of political stability, government efficiency, and legal system on the location choice of Chinese resource enterprises’ cross-border M&A, with a sample of 406 cross-border M&A events for Chinese resource enterprises in 29 countries. The results show that: (1) Political stability and government efficiency have a significant positive impact on the cross-border M&A, while legal system has a significant negative impact, and resource intensity has a regulatory impact on the institutional quality; (2) The location choice of oil and gas enterprises is mainly positively influenced by political stability and negatively influenced by legal system, while the power industry is mainly positively influenced by political stability and government efficiency; (3) The three kinds of institutional quality significantly affect the location choice of state-owned resource enterprises’ cross-border M&A, while only political stability has significant effect for non-state-owned enterprises. Chinese resource enterprises could pay more attention to the institutional quality during cross-border M&A, and try to choose the target country with stable political environment and high government efficiency in the future.

Key words: resource enterprises, cross-border mergers and acquisitions (M&A), location choice, institutional quality, government efficiency, political stability