Abstract
Theoretically grounded in the ownership, location, and internalization (OLI) paradigm and institutional theory, this article investigates major macro-level factors that determine cross-border mergers and acquisitions (CBMAs) by Chinese firms in developed markets. Using panel data of Chinese CBMA deals in developed markets from 1996 to 2012, we found that market size, natural resources, and strategic assets of host advanced economies positively affected the number of Chinese CBMAs in the developed markets. With regard to institutional variables, the overall economic freedom of host countries positively affected Chinese CBMAs, whereas the host government effectiveness negatively influenced the number of Chinese CBMAs. Furthermore, the above hypothesized effects were significantly strengthened by the home country's government involvement mainly through ownership. Finally, we found that significant factors to explain Chinese overall outward foreign direct investment (OFDI) are not necessarily applicable to explain Chinese CBMAs.