Top Executives’ Multi-Background and M&A Decisions: Evidence from Chinese-Listed Firms

This paper investigates the effect of top executives’ multi-background, namely political, financial, and academic backgrounds on firms’ M&A decisions. Using data on M&A deals of Chinese listed firms from 2008 to 2018. The results show that top executives with political links are more likely to be involved in a firm’s M&A activities. Executives’ financial background has little impact on M&A decisions except that those executives having working experience in policy banks promote M&A. Executives with a broader academic background are less likely to undertake M&A. We further check the moderating effect of state ownership between executives’ backgrounds and M&A decisions and find that their backgrounds have a stronger impact on M&A decisions in SOEs than that in non-SOEs. Our main results are robust after considering firms’ geographic location and the policy effect of 2008 during the global financial crisis. Overall, our findings suggest that executives’ political, financial, and academic backgrounds play different but significant roles in making M&A decisions.