Research On The Effect And Mechanism Of China’s Foreign Cultural Exchange On The Performance Of Cross-border M&A

Under the new circumstances,with the deepening of the Belt and Road Initiative,Chinese enterprises are increasingly active in M&A in countries along the Belt and Road,with both the number of cross-border M&A and the transaction value increasing.However,the increase in the number and amount of M&A has not brought about significant performance of cross-border M&A.Compared with domestic M&A,the urgent problem of cross-border M&A is to overcome the integration obstacles caused by the cultural differences between the two parties.As language teaching institutions,Confucius Institutes are committed to promoting Chinese language and culture to countries and regions along the Belt and Road,providing cultural support for the Belt and Road Initiative,and playing an important role in the governance of economic and trade relations along the Belt and Road.Therefore,from the perspective of cultural exchange,this paper deeply explores the impact of Confucius Institutes on Chinese enterprises’ cross-border M&A performance in countries along the "Belt and Road".Based on the panel data of Chinese enterprises’ overseas M&A along Belt and Road from 2007 to 2017,this paper studies the effect and mechanism of Confucius Institute on the performance of cross-border M&A.First of all,in order to overcome the limitations of single financial index,this paper constructed an index system to examine the overall performance of enterprises,and used factor analysis method to measure the long-term performance of sample enterprises in cross-border M&A.Then,empirical methods are used to test the impact of Confucius Institutes on the performance of cross-border M&A.The results show that the number of Confucius Institutes established in host countries has a positive impact on the performance of cross-border M&A.Secondly,the mediation effect test proves that Confucius Institutes play a role in M&A performance through cultural communication.On this basis,this paper further explores the impact of Confucius Institutes on cross-border M&A performance under the above heterogeneous characteristics from the ownership nature of the main acquirer,whether the acquirer is in the Confucian cultural circle and the type of M&A.The results show that Confucius Institutes have a significant effect on the performance of both state-owned and private enterprises in cross-border M&A.Compared with Confucius Institute established in Confucian culture circle,Confucius Institute located in non-Confucian culture circle has a more significant impact on the performance of cross-border M&A.Confucius Institutes promote horizontal M&A performance more than vertical M&A performance.The research conclusion of this paper shows that China’s foreign cultural exchange has a significant improvement effect on the performance of cross-border M&A.Based on this conclusion,this paper puts forward policy suggestions from the perspectives of government and enterprises to prevent the risk of cultural differences in cross-border M&A,so as to boost Chinese enterprises to “go global”.