Regulatory institutional misalignment and cross-border acquisitions: evidence from an emerging-market country
Chen G. Dong J. Hu J. Zhang F.
March 2024Palgrave Macmillan
Journal of International Business Studies
2024#55Issue 2172 - 193 pp.
Do anticorruption efforts affect a country’s investment appeal? Business investment depends on a stable and predictable institutional environment, but meaningful control of corruption typically requires a radical change in the institutional system that has enabled it. This underscores the need for a deeper understanding of how anticorruption efforts can affect the enforcing country’s institutional system on which investment relies. Synthesizing the concept of institutional complementarity and the literature on different modes of anticorruption enforcement, we propose that campaign-style anticorruption enforcement in emerging-market countries can produce “regulatory institutional misalignment,” defined as a situation in which government agencies continue to monopolize critical resources while the exercise of bureaucratic discretion essential to achieving effective resource allocation diminishes substantially. We theorize how such institutional misalignment can harm domestic business environments and drive emerging-market firms to engage more actively in cross-border acquisitions (CBAs). Our hypotheses derived from the regulatory institutional misalignment perspective on CBAs are supported by empirical analyses using data from a sample of privately controlled firms during China’s unprecedented anticorruption campaign launched in late 2012. We also discuss this study’s contributions to the IB literature on institutional complementarity, CBAs by emerging-market enterprises, and anticorruption efforts’ impact on international business.
Campaign-style anticorruption enforcement , Cross-border acquisitions , Difference-in-differences (DiD) analysis , Emerging-market firms , Regulatory institutional misalignment
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INSEAD, Singapore, Singapore
Graduate School of Business, Nazarbayev University, Astana, Kazakhstan
Institute of Financial and Accounting Studies/Center for Accounting Studies, Xiamen University, Fujian, Xiamen, China
China Europe International Business School, Shanghai, China
INSEAD
Graduate School of Business
Institute of Financial and Accounting Studies/Center for Accounting Studies
China Europe International Business School
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