An empirical study of Chinese listed firms' herd behaviour in cross‐border mergers and acquisitions.

Based on the sample of Chinese listed firms from 2003 to 2019, this paper investigated the herd behaviour in cross‐border mergers and acquisition (CB M&A) decisions using ordinary least‐squares (OLS) and feasible generalised least squares (FGLS) models. It was found that the Chinese listed firm CB M&A location decisions were similar to the choices made by other firms in the same industry in the previous year, with the bellwether firms in high industry market positions being the key reference objects. The herd behaviour was found to be more pronounced when the firms were younger and smaller, there was strong internal industry competition, estranged bilateral political distances, and poor host country governance. The quantification of the economic consequences of the herd behaviour revealed a negative effect on the short‐term performances after the CB M&As but improved firm performances over the long term, with these improvements being more significant when the herd behaviour was led by bellwether firms. [ABSTRACT FROM AUTHOR]