Governing SOEs' Outbound Expansion: Accountability System for Operations and Investments and Cross-Border Mergers and Acquisitions

This paper exploits the implementation of the accountability system for irregular operations and investments as a quasi-natural experiment and employs a difference-in-differences approach to examine its impact on the completion rate of cross-border mergers and acquisitions (M&A) by state-owned enterprises (SOEs). The results show that the implementation of the accountability system significantly increases the likelihood of SOEs successfully completing cross-border M&A deals. Mechanism analyses indicate that the effect operates primarily through reducing overall risk, improving the information environment, and curbing managerial opportunism. Heterogeneity analyses reveal that the positive effect is more pronounced when host-country risk is lower, acquisition targets are clearly defined, managerial short-termism is weaker, and the marketization level is higher. Additional analyses suggest that, while improving the completion rate, the accountability system also significantly enhances M&A quality by improving market reactions, increasing firm value, reducing asset impairment, and enhancing subsequent operating performance. This study provides empirical evidence on how the accountability system affects SOEs' cross-border M&A behavior and offers useful policy implications for promoting the high-quality international expansion of SOEs.