M&A Due Diligence in China—Institutional Framework, Corporate Practice and Empirical Evidence - American Journal of Industrial and Business Management

AJIBM > Vol.7 No.8, August 2017

M&A Due Diligence in China—Institutional Framework, Corporate Practice and Empirical Evidence ()

HTML XML

Download as PDF (Size: 725KB) PP. 998-1029

DOI: 10.4236/ajibm.2017.78072 2,076 Downloads 4,698 Views Citations

Author(s)

Lars Büttner, Reinhard Meckl

Affiliation(s)

University of Bayreuth, Bayreuth, Germany.

ABSTRACT

Western companies have established rigorous and robust processes to evaluate a target enterprise before its legal acquisition. This should allow the risks to be mitigated by adjusting purchase price or representations & warranties. In China, however, investors experience that conducting such M&A due diligence might be less effective. Based on neo-institutional economics, experience from corporate practice and empirical evidence, our paper explains the limitations of the approach. Our research concludes that following Western best-practice procedures does not necessarily reduce the uncertainty of an investor in China. Likewise, experts in China do not fully recognize typical M&A measures and indicators as informational substitutes (e.g. contractual terms like earn-out-agreements). Due to different cultural and institutional framework conditions, it takes further activities to overcome the asymmetric information between investor and seller.

KEYWORDS

China, Due Diligence, Information Asymmetry, Mergers & Acquisitions

Share and Cite:

Büttner, L. and Meckl, R. (2017) M&A Due Diligence in China—Institutional Framework, Corporate Practice and Empirical Evidence. American Journal of Industrial and Business Management, 7, 998-1029. doi: 10.4236/ajibm.2017.78072.

Journals Menu

Follow SCIRP

	+1 323-425-8868
	customer@scirp.org
	+86 18163351462(WhatsApp)
	1655362766

	Paper Publishing WeChat

Journals Menu

Home

About SCIRP

Service

Policies