The Belt and Road Initiative and Chinese Cross-border Mergers & Acquisitions

The Belt and Road Initiative was introduced to further economic connections with partner countries and foster development within China. We examine the effect of the Initiative on Chinese cross-border M&As. We find that the Initiative significantly increases the probability and the transaction amount of M&A deals in target countries. Moreover, the market reacts more positively to these deals. We find that the effect is entirely driven by state-owned enterprises during our sample period and it is more pronounced in firms that are located on the more-developed eastern coast of China. The evidence suggests that the announcement of the Belt and Road Initiative was followed by economically meaningful cross-border M&A in targeted countries.