External sources of political connections: Financial advisors and Chinese acquisitions

Xiao Gang Bi, Danni Wang

Research output: Journal PublicationArticlepeer-review

11 Citations (Scopus)
52 Downloads (Pure)


This study considers the effects of an external form of political connection, namely, politically connected financial advisors, on the value creation of Chinese acquiring firms over the period 2004–2014. Using data consisting of 1,623 Chinese mergers and acquisitions (M&As) deals, we show that politically connected financial advisors create significantly higher market value for acquiring firms, after controlling for firms' own political connections and reputation. Further analysis indicates that the appointment of political advisers can improve an acquiring firm's long-term industry-adjusted operating performance and help acquirers reduce bid premiums. We show that private firms and stock-pay acquisitions are more likely to appoint politically connected financial advisors in M&A transactions, whereas our findings remain unchanged after controlling for endogeneities.

Original languageEnglish
Pages (from-to)705-722
Number of pages18
JournalInternational Journal of Finance and Economics
Issue number4
Publication statusPublished - Oct 2018


  • acquisition performance
  • financial advisors
  • mergers and acquisitions
  • political connection
  • value creation

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


Dive into the research topics of 'External sources of political connections: Financial advisors and Chinese acquisitions'. Together they form a unique fingerprint.

Cite this