The Impact of Politician's Risk aversion Motivation on Cross border M&A around Political Turnover
Politics is increasingly recognized as an important influencing factor for firms' cross border M&A. Yet the specific influence mechanism remains vague. In this study, we investigate the impact of politician' intervention on cross border M&A activity through the lens of political turnover in China. We find there is a reduced risk of cross border M&As preceding political turnover, followed by an increase in the risk of cross border M&As directly after turnover events. And the effect is more significant for non stated owned enterprises. Our findings prove that it is politicians' risk avoiding motivation that leads to lower risk of cross border M&As around political turnover, rather than firms' responsive strategy to political uncertainty. In addition, we also provide evidence that besides risk aversion, promoted politicians have more incentive to achieve a desired performance of cross border M&As, but not for politicians non promoted. Our paper highlights that risk averse motivation of politicians around