A Principals-Principals Perspective of Hybrid Leviathans: Cross-Border Acquisitions by State-Owned MNEs

Journal of Management, Forthcoming

56 Pages Posted: 9 Feb 2018

See all articles by Victor Zitian Chen

Victor Zitian Chen

University of North Carolina, Charlotte; University of North Carolina (UNC) at Charlotte - The Belk College of Business Administration

Aldo Musacchio

Brandeis University- International Business School; National Bureau of Economic Research

Sali Li

University of Utah - David Eccles School of Business

Date Written: January 30, 2018

Abstract

We propose a private-government principals-principals (PP) approach to understand corporate governance of state-owned multinationals. We explain how the conflicts between large government and private blockholders may affect managerial decisions in the propensity of completing a cross-border acquisition and its dollar value. We argue that conflicts among different blockholders make it difficult to pursue large-scale, cross-border deals because such conflicts may lead to a less coherent objective function and to reject deals that do not satisfy these groups’ conflicting objectives. Finally, we show that such blockholder conflicts are moderated by the salience of the government’s “dual influence” on the firm in question, related to a state’s soft-budget constraint and/or diplomatic advantages in countries where the host and the home markets do not enjoy a bilateral investment treaty. Empirically, we have found highly supportive evidence based on a global sample of 7,564 cross-border acquisitions between the years of 2004 and 2013.

Keywords: Agency Theory, State-Owned Enterprise, Multinational Enterprise, Cross-Border Acquisitions

JEL Classification: F21, F23, F53, F55, G34, G38, H6, M16

Suggested Citation

Chen, Victor Zitian and Musacchio, Aldo and Li, Sali, A Principals-Principals Perspective of Hybrid Leviathans: Cross-Border Acquisitions by State-Owned MNEs (January 30, 2018). Journal of Management, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3113886

Victor Zitian Chen (Contact Author)

University of North Carolina, Charlotte ( email )

The Belk College of Business
Charlotte, NC 28223

HOME PAGE: http://www.ChenZitian.com/

University of North Carolina (UNC) at Charlotte - The Belk College of Business Administration ( email )

The Belk College of Business
Charlotte, NC 28223

HOME PAGE: http://www.ChenZitian.com/

Aldo Musacchio

Brandeis University- International Business School ( email )

415 South Street MC 32
Waltham, MA 02454-9110
United States

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org/people/aldo_musacchio

Sali Li

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

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