What drives the international ownership strategies of Chinese firms? The role of distance and home-country institutional factors in outward acquisitions

Abstract

We study antecedents of the international ownership strategies of Chinese multinational enterprises (MNEs). Analyzing firm-level data on 380 outward acquisitions of Chinese MNEs during 2005-2012, we find their ownership shares to be negatively related to administrative and regulative distance, but positively related to cultural and geographical distance between home and host countries. Moreover, higher ownership shares are acquired in target countries with a high density of strategic assets and high financial-market capitalization, while state-owned enterprises take lower equity positions than private companies. Overall, we find home-country institutional factors more relevant for international ownership strategies among Chinese MNEs than cross-national distance factors.