Analysis Of Flow Direction For Chinese Enterprises' Overseas M&A: Base On Gravity Model

For Chinese enterprises those participating in overseas M&A, location choice is the first problem to be faced, this directly affect that enterprises make full use of their advantages and the layout of their multinational operations, thereby affecting the implementation of corporate international strategy and M&A success. Therefore, it is necessary to analysis the flow direction of overseas M&A and study the various factors which play different roles. At present, the study emphasis on overall FDI flow, ignoring the special nature of overseas M&A. In 2010, there was a rapid increase in China's overseas M&A, as the acquirer's M&A transactions ranks second in the world, Only behind the United States. In this context, analyze the factors affecting the flow direction of Chinese enterprises'overseas M&A, no doubt has some theoretical and practical significance.In this paper, I summarize the results of previous studies and make an analysis of the development process of Chinese enterprises' overseas M&A. Moreover, I point out the major problems in present situation. Then, I summarized the factors affecting M&A flows from the perspective of investment and host countries respectively. In order to do further study, I use the basic gravity model built by Keith Head for overseas M&A as the research framework .I use Pooled regression, TOBIT regression and Zero-inflated negative binomial regression for empirical analysis, studying more comprehensively on the factors affecting M&A flows.The results show that cultural distance, skills and other specific factors of overseas M&A play important roles. Meanwhile, bilateral trade, the cleanliness of the host government, financial deepening also have significant impact. Traditional FDI affecting factors such as host and home country's GDP and distance is not significant overseas M&A flow. Base on the conclusion, I give government and enterprises some recommendations, in order to encourage and facilitate Chinese enterprises'overseas M&A can develop more healthy.