Abstract: Taking Shanghai and Shenzhen A-share listed companies from 2010—2019 as sample, this paper empirically studies the effect of regional risk preference on corporate M&A from the perspective of informal institution. We find that regional risk preference has a significant promoting effect on firms' M&A behavior. Specifically, the probability of M&A is higher for firms in region with higher risk preference. This conclusion remains unchanged after a series of robustness tests and using PSM, instrumental variables and DID method to overcome endogenous problems. Further studies show that enterprises in regions with high risk preference are more inclined to carry out cross-regional M&A and the risk of M&A is higher; compared with enterprises in regions with low risk preference, although there is no significant difference in short-term M&A performance, the long-term M&A performance is significantly poor. Finally, focusing on the internal and external corporate governance factors that influence the role of informal institution, we find that the promotion effects of regional risk preference on comporate M&A are mainly concentrated in non-state-owned firms, small-scale firms and firms located in areas with poor formal institution development. This paper reveals and provides the theoretical logic and empirical evidence of the impact of regional risk preference on companies' M&A behavior, which helps us to have a overall understanding on the influence of informal institution on China's capital market in the background of high-quality development and enriches the relevant researches in the field of “culture and finance”.

Key words: regional risk preference, M&A preference, cross-regional M&A, M&A risk, M&A performance