Impact of host-country corruption on U.S. and Chinese cross-border acquisitions
Article first published online: 21 OCT 2010
© 2010 Wiley Periodicals, Inc.
Thunderbird International Business Review
Volume 52, Issue 6, pages 491–507, November/December 2010
How to Cite
Malhotra, S., Zhu, P. and Locander, W. (2010), Impact of host-country corruption on U.S. and Chinese cross-border acquisitions. Thunderbird Int'l Bus Rev, 52: 491–507. doi: 10.1002/tie.20375
- Issue published online: 21 OCT 2010
- Article first published online: 21 OCT 2010
Does corruption in a target country create a similar effect on cross-border acquisitions (CBAs) by firms from a developed and a developing country? This article empirically examines the relationship between corruption and CBAs by firms from China and the United States. Based on a combined sample of 10,236 completed acquisitions over the period of 1990–2006, the authors find that both Chinese and U.S. firms make a significantly greater number of acquisitions in less corrupt countries. However, unlike the U.S. CBAs, we find a significantly positive relationship between the transaction value of Chinese CBAs and the level of perceived corruption in the target country. It is suggested that having been schooled in weaker institutions themselves, Chinese firms may find it easier to deal with corrupt conditions in target countries, giving them an advantage over firms from less corrupt countries. © 2010 Wiley Periodicals, Inc.