Seminar (Dept. of Accounting)

Theme：Corruption and Takeovers: Evidence from Anti-Corruption Campaign

Speaker：SIYANG TIAN

Time：2020-11-11 10:30

Address：Room 706, Mingde Business Building

Language：Chinese

ABSTRACT:

This paper examines how political corruption affects M&A activities. In a difference-in-difference research design by exploiting the anti-corruption campaign across different regions as a negative shock to local political corruption, we find that reduction in corruption increases cross-region takeover activities by 40% and deal volume by over double. Further analysis shows that the decrease in market entry barriers and decreased potential threat of political extraction could be two plausible economic channels behind these effects. Reduction in corruption also leads to higher bidder returns and improves post-acquisition performance. Furthermore, such a campaign results in more cross-border M&A transactions and better local economic development (higher GDP per capita growth, higher general government revenue per capita, and lower unemployment rate). Overall, our results indicate that the anti-corruption campaign, which helps curb local corruption, could trigger cross-region takeover flow and lead to better economic outcomes.