Online Seminar – Political Turnover and the Cross-border Acquisitions of Chinese Firms

Professor Jane Lu, City University of Hong Kong

Acquisitions are subject to governmental interventions. Yet prior studies on acquisitions either paid scant attention to the role of government or equated it to the laws and regulations issued by government. This study unpacks the black box of “government” and focuses on the agents who implement governmental policies. We contend that government officials can wield their influence on firms to align corporate actions with their political incentives. We propose that officials at the end of their terms are more risk averse, and therefore, tend to discourage high-risk deals. The reduction in the risk level of acquisition deals during political turnover period is contingent on officials’ incentive and ability to influence firms in their jurisdictions. In a sample of 447 cross-border acquisitions between 2003 and 2014 by listed Chinese firms, we find that during subnational political turnover periods, cross-border acquisition deals tend to have lower risk profile as shown in lower stakes, more industry relatedness, and smaller institutional distance between the acquirer and the target. Further, the reduction in the risk level of cross-border acquisitions during political turnover periods varies by the risk-taking propensity of officials and the resources in their control over the firms. This study provides a political perspective to acquisitions and highlights how government officials’ political incentives could influence cross-border acquisitions.

Speaker bio

Jane Lu is a Chair Professor and Head of Department of Management at the City University of Hong Kong. She received her MBA from China Europe International Business School and Ph.D. from the Ivey School of Business, Western University.

Jane’s research centers on international strategy and non-market strategy with a focus on emerging market firms. The question of what influences the success of a firm is at the heart of research in strategy and international management. Her earlier research investigates this core area of inquiry by looking at broad level issues that underlie the international strategy of a firm, as well as specific strategic questions, such as how to make a successful foreign entry into a country, or how to manage successfully in a foreign country. Her recent research continues this line of research but with a focus on emerging market firms and their non-market strategies such as political strategy and corporate social responsibility. She has examined firms based in Japan, China (including Taiwan), India and USA across a variety of organisational forms, such as state-owned enterprises, collective-owned enterprises, private-owned enterprises, foreign subsidiaries, business groups and family firms.

Jane has published in leading academic journals such as Academy of Management Journal, Administrative Science Quarterly, Strategic Management Journal, Journal of Management and Journal of International Business Studies, among other journals. Her work has received more than 7000 google citations and generated significant impact to the field. She is currently a Senior Editor of Journal of World Business and a Consulting Editor of Journal of International Business Studies. She is also the President of Asia Academy of Management.

Prior to joining academia, Jane Lu worked in senior management positions in a major international trading company and in Rabobank.

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