Study On The Influence Of Exchange Rate Fluctuation On Chinese Enterprises’ Transnational Mergers And Acquisitions

The reform and opening-up policy,the "going out" strategy and the "One Belt,One Road" initiative have contributed to the long-term development of cross-border M&A by Chinese enterprises.The scale of cross-border M&A by Chinese enterprises rose rapidly,reaching a peak of US$135.33 billion.After the "8-11" exchange rate reform,the two-way fluctuation of RMB exchange rate has been enhanced,and the exchange rate,as a pointer of international trade and political and economic policies,has a significant impact on the decision and scale of cross-border M&A of Chinese enterprises.This study is helpful to guide Chinese enterprises to actively face the risk of exchange rate fluctuation,promote Chinese enterprises to actively participate in international economic cooperation,and have positive significance to the healthy and orderly development of cross-border M&A of Chinese enterprises.This paper takes 1425 cross-border M&A transactions of A-share listed companies in Shanghai and Shenzhen as the research object to investigate the impact of exchange rate fluctuations on the decision and scale of cross-border M&A of Chinese enterprises.This paper firstly compares and summarizes the relevant literature,finds the existing research deficiencies,and presents the marginal contribution of this paper.Secondly,the theoretical analysis and research hypothesis are proposed to describe and analyze the horizontal trend and fluctuation of RMB effective exchange rate and bilateral exchange rate between China and the US,and briefly analyze the scale of cross-border M&A of Chinese enterprises,the distribution of industries and the distribution of countries and regions where the M&A parties are located,so as to pave the way for the following research.Then,we collect data,screen samples,design models and conduct descriptive statistics on relevant variables to study the impact of exchange rate fluctuations on cross-border M&As.Finally,conclusions are drawn and policy recommendations are proposed.It is found that: first,enhanced RMB exchange rate volatility has a significant positive impact on the cross-border M&A decisions and scale of Chinese firms.Second,effective exchange rate volatility has a significant positive impact on the short-term performance of cross-border M&A of Chinese firms;bilateral exchange rate volatility between China and the U.S.has a significant positive impact on the long-term performance of cross-border M&A of Chinese firms.Third,there is significant heterogeneity in the effects of exchange rate fluctuations on Chinese firms’ cross-border M&A.The impact of exchange rate fluctuations on the decision and scale of cross-border M&As is particularly pronounced for enterprises with high competitive pressure in their industries,enterprises whose M&A destination countries are high-income countries,and enterprises that conduct cross-border M&As in the form of "single M&A".Fourth,cross-border M&A can effectively reduce the exchange rate risk exposure of enterprises.