Abstract
With globalization, the cases of Chinese enterprises' cross-border mergers and acquisitions (M&A) are increasing rapidly. The institutional environment of the host country has become an important factor influencing M&A performance, which has a profound impact on the success or failure of cross-border M&A. Based on this, for our study, we selected cases of cross-border M&A of listed companies in China from 2007 to 2018 as research samples to empirically test the impact of the host country's governance capacity on the cross-border M&A performance of acquirers. It was found that the host country's governance capacity has a negative effect on the M&A performance in the short term, but in the long term, it can effectively improve the cross-border M&A performance of acquirers. At the same time, specific to the relationship between the governmental governance capacity of six different dimensions and long-term M&A performance, the government effectiveness, regulation quality, and rule of law have the most significant promotional effect on long-term M&A performance. This implies that acquirers should focus on the long-term impact of governmental governance capacity on M&A, and consciously lean toward countries with strong governance capacity in order to obtain long-term value growth when arranging overseas M&A activities. The conclusion of this paper provides a reliable basis on which for companies to achieve sustainable growth in complex economic activities.