The Impact of the Belt and Road Initiative Connectivity on the Performance of Chinese Cross-Border Mergers and Acquisitions

Abstract

Since the Belt and Road Initiative (BRI) was put forward, more and more countries have participated in it, making it the top-level platform for regional cooperation. The increase in crossborder mergers and acquisitions (M&A) of Chinese enterprises has also become an irreversible trend. Cross-border M&A can make enterprises give full play to their advantages, but its high risk makes the success rate of M&A not optimistic. Realizing connectivity as the core goal of the BRI will help improve the international investment environment from all aspects, thus improving the performance of M&A. This study reveals the impact of connectivity on Chinese cross-border (M&A) on the BRI countries, uses the event study method to measure the short-term performance of M&A. The regression result shows that the policy coordination, financial integration, and people-to-people bond connectivity have a more positive impact on M&A performance in the short term. Meanwhile, greater connectivity has been found in developing countries and the Association of Southeast Asian Nations (ASEAN) countries. Robustness test results indicate that CAR performance in ASEAN countries is better than non-ASEAN countries, which also demonstrates that greater connectivity can improve M&A performance. The study fills the gap of existing papers that lack the data support to explore the relationship between Five Connectivity and M&A performance, also puts forward some suggestions on how Chinese enterprises can improve M&A performance.