The Impact of Overseas M&A on Performance Sensitivity of CEO Turnover: Evidence From Chinese Listed Companies

In recent years, with China’s growing economic strength driven by the reform of market economic system and the implementation of “going out” strategy, overseas M&A has become an important channel for many Chinese listed companies to optimize the resource allocation and realize the leap of global value chain. Overseas M&A not only garners the advanced technology from overseas companies, but also improves the corporate governance of the parent company. With the data of Chinese listed companies from 2003 to 2019, this paper empirically examines how overseas M&A of listed companies influences the performance sensitivity of CEO turnover, and the PSM method and placebo tests are adopted to discuss the endogeneity. Finally, we proceed the heterogeneity tests by the nature of property rights, CEO power and the market competitiveness of product, respectively. The empirical results show that overseas M&A of Chinese listed companies will significantly improve the performance sensitivity of CEO turnover, and the phenomenon is more significant in SOEs and companies with lower management shareholding ratio, older CEO age, longer tenure of CEO, and lower product market competition. The conclusion of this paper not only offers a unique theoretical perspective for China's listed companies to improve their governance efficiency through overseas M&A, but also provides policy references for improving China's overseas M&A behavior in practice.