Do Foreign Acquisitions Improve the Performance of Acquired Companies—Basing on Quasi-nature Experiment of Acquisitions Events in China

Based on the characteristics of foreign investors' origin and industry relevance, this paper investigated the impact of foreign acquisitions on R&D and innovation, productivity, export and financing constraints of Chinese acquired enterprises with the “Quasi-Natural experiment” of the transformation of Chinese pure domestic enterprises into foreign enterprises. Using the PSM with DID method, the paper found that: first, foreign acquisitions from Hong Kong, Macao and Taiwan had hindered the innovation ability of new products. The acquisitions from developed countries had weakened the R&D capacity of Chinese acquired enterprises, but increased the sales of new products. Second, acquisitions in non-related industries increased the R&D investment of enterprises, but decreased the innovation ability of new products. Third, the acquisitions of Chinese enterprises by developed countries improved the productivity, and acquisitions in the same industry improve productivity. Fourth, the export and financing constraints of enterprises had been improved. The paper expands the research on the impact of foreign acquisitions on enterprises, and provides a theoretical and empirical basis for China to “introduce” high-quality foreign investment.