The Effects Of Macro Risks On The Success Rate Of Cross-Border Mergers And Acquisitions By BRICS Countries

In recent years,cross-border mergers and acquisitions(M&As)by emerging economies,represented by BRICS countries,are rapidly growing and have become an important means for developing countries to realize globalization and enhance international competence.However,it is not always easy for BRICS countries to carry out cross-border M&As.The coordination of fiscal policies and exchange rate policies of each country influences the risk assessment of cross-border M&As.The exacerbation of trade frictions has direct and indirect influence on companies' foreign investment.The institutional environment difference of host and home countries influences the implementation of deals.The ownership,industry,company size and international experiences also influence the processes and results of cross-border M&As.How do economic risks in the macro level,industrial risks in the medium level and firm heterogeneity risks in the micro level affect the success of cross-border M&As by BRICS countries?To answer these questions,this paper studies the cross-border M&A deals of BRICS countries and aims to provide additional knowledge and enlightenment to this field of research.This paper first reviews literature on the effects of macro risks on cross-border M&As such as fiscal risk,exchange rate fluctuation,trade friction,institutional environment and medium and micro level risks in the resource and high-tech industries,experiences,ownership and interaction terms to clarify the influencing factors in theory.And then we introduce the development and current status of cross-border M&As by BRICS countries including the trends of deal values,amounts as well as the locations,industries and scale distributions through which we can get an intuitive understanding and basic knowledge of the current volume and scale of cross-border M&As by BRICS countries.Later,we use econometric regressions to analyze the effects of the above indicators on cross-border M&As by China,India,Russia,Brazil and South Africa.The deal data come from BvD Zephyr global M&A database.Macro level indicators of each country come from websites of the World Trade Organization(WTO),the International Monetary Fund(IMF),the Organization for Economic Cooperation and Development(OECD),Transparency International(TI)and other related databases.We use Stata to carry out quantitative analysis with the Logit model.We interpret the results carefully and make comparisons between countries and give economic explanations in reality.We then select representative cases of BRICS countries,give brief introductions to deal processes and comment on the results in support of the theoretical conclusions.The cases we adopt include the acquisition of Nexen,an oil company from Canada by CNOOC(China National Offshore Oil Corporation);the acquisition of Panaya,a software corporation from America by Infosys,India;the acquisition of TNK-BP(Tyumenskaya Neftyanaya Kompaniya,Tyumen Oil Company-British Petroleum)by Rosneft of Russia;the acquisition of Simandou iron mining lot of Guinea by Vale of Brazil and the acquisition of natural gas assets of Talisman,an energy company in Canada by SASOL in South Africa.According to the results above,we come to the conclusions of this paper:1.Institution quality and institutional distance have negative impacts on the success rate of cross-border M&As by BRICS countries.2.Fiscal risk of the host country has a positive effect on the success rate of cross-border M&As by BRICS countries in the resource industry and deals conducted by state-owned enterprises.3.Trade frictions between home and host countries have an overall impediment effect on cross-border M&As by BRICS countries,reflecting a"group repression" effect.4.International experience has a "U" relationship with the success rate of cross-border M&As by BRICS countries.5.The nature of state-owned enterprises has a significant impediment effect on cross-border M&As by BRICS countries,especially in resource and high-tech industries.6.Case study shows that the main incentives of cross-border M&As by BRICS countries are seeking.-for resources,technologies,market shares,efficiency and assets,etc.Finally,combined with the reality of China's cross-border M&As,we come up with relative suggestions on policy making and hope to provide some reference and guidance to the further development of Chinese firms,globalization.The main innovations of this paper lie in:first of all,we use BvD Zephyr global M&A database to study cross-border M&A cases by BRICS countries between 2003 and 2017,which covers a long time span and quite recent cases which can therefore reflect the current situations of cross-border M&As by BRICS countries and indicates further trends.Secondly,we make detailed comparisons between countries and do in-depth research on the branch of cross-border M&As among other forms of international investment,which is contributes to the current theoretical and empirical research and provides reference for the effect and market performance of emerging economies in globalization.Finally,this paper combines quantitative econometric analysis and qualitative case study,which is mutually supportive and strengthens the credibility and persuasiveness of the conclusions.Of course,this paper has some deficiencies such as certain omissions of data,and although we study the factors that influence cross-border M&As by BRICS countries,we have not given a theoretical framework that entails all the factors and explains the transmission mechanism.The econometric methods we use are still to be improved to make the results more robust.These problems may provide possible inspirations for further research.