Management Review ›› 2024, Vol. 36 ›› Issue (8): 3-14.

• Economic and Financial Management •    

SOE Involvement, Difference in Regional System and M&A Process—From the Legitimacy Perspective

Ding Jiayan, Su Yiyi, Zhang Qinghua   

  1. School of Economics and Management, Tongji University, Shanghai 200092
  • Received:2022-09-05 Published:2024-09-03

Abstract: Based on the legitimacy perspective, this study employs domestic merger and acquisition (M&A) events of China's A-share listed companies from 2000 to 2019 to examine the effect of state-owned enterprise (SOE) involvement on the success rate and completion time of domestic M&As, as well as the moderating effect of regional institutional difference. Empirical results show that on the one hand, domestic M&As with SOE involvement have an advantage in gaining legitimacy and hence a higher success rate, but on the other hand, such M&As take a longer time to complete because of SOE's rigorous decision-making and strict investigation process. Furthermore, the positive effect of SOE involvement on the success rate a M&A transaction is more significant when the two sides of the transaction operate under distinctly different regional systems, which is an indirect reflection of SOE's unique role in bridging differences in regional systems. Taking the level of SOEs into account, we find that both central SOEs and local SOEs can improve the success rate of M&A, and the effect of central SOEs is greater. Moreover, local SOE involvement will prolong the M&A process, but central SOE involvement will not. This study not only provides a new perspective for understanding domestic M&A process that involves SOEs, but also enriches the legitimacy management literature.

Key words: M&A success rate, M&A completion time, SOE, legitimacy benefit argument, legitimacy management cost