Does policy uncertainty influence mergers and acquisitions activities in China? A replication study

Abstract In this paper, we replicate the results of Bonaime, Gulen and Ion (Journal of Financial Economics, 2018, p531–558) who investigate the influence of policy uncertainty on mergers and acquisitions (M&As) amongst US firms for the period 1985 to 2014. Utilising a similar dataset and methodology, we present confirmatory evidence suggesting a negative influence of policy uncertainty on M&As in the US context. We repeat the analysis on a sample of Chinese firms from 2003 to 2017 and also find that subsequent year M&A likelihood is decreasing in policy uncertainty amongst Chinese firms. Overall, our replication exercise confirms the negative effect of policy uncertainty on subsequent M&As in both countries, regardless of institutional differences. Further, the economic significance of the association is found to be lower for both the US and Chinese samples in comparison to the original study.