Journal of Banking & Finance Vol. 150 2023
The real effects of corruption on M&A flows: Evidence from China's anti-corruption campaign
Abstract
We exploit the public enforcement of the anti-corruption campaign across China to identify a causal role of political corruption in corporate takeover flows through a difference-in-differences (DID) analysis. We find that a reduction in corruption increases cross-region takeover activities by 40% and that deal volume more than doubles. Further analyses reveal that treatment effects are more evident for non-SOEs, politically unconnected acquirers, and acquirers that are less corrupt ex ante. We also show that the impact of the anti-corruption campaign is more pronounced in segmented cities where corruption practices are more entrenched. The reduction in corruption leads to higher bidder returns, improves post-acquisition performance, and markedly strengthens local economic development. The evidence indicates that the anti-corruption campaign was effective in attracting inbound corporate investments and supporting economic growth.
- DOI
- 10.1016/j.jbankfin.2023.106815
- Volume
- 150
- Pages
- 106815
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib