Can digitalization facilitate cross-border M&A? Evidence from Chinese A-share listed companies

This paper investigates the impact of digitalization on cross-border M&A completion probability. Using a sample of Chinese firms listed on the A-share market between 2005 and 2021, we find that firm digitization significantly promotes cross-border M&A completion. The finding still holds after a series of robustness tests. Further analysis indicates that the promotion effect is more pronounced in samples with high finance constraints, technology-based M&A transactions, and short institutional distances. Further, we provide evidence that digitalization facilitates crossborder M&A by enhancing firms' innovation capabilities and reducing management myopia. This paper provides new light on how the development of digital technologies is changing the ways publicly traded corporations behave internationally.

Automated summary

This research investigates the impact of digitalization on the completion probability of cross-border M&A. By analyzing a sample of Chinese firms listed on the A-share market between 2005 and 2021, it is found that firm digitization significantly promotes the completion of cross-border M&A. This finding remains consistent after conducting a series of robustness tests. Further analysis reveals that the promotion effect is more pronounced in samples with high finance constraints, technology-based M&A transactions, and short institutional distances. Additionally, evidence is provided to support that digitalization facilitates cross-border M&A by enhancing firms' innovation capabilities and reducing management myopia, shedding new light on the behavior of publicly traded corporations in international settings.