Chinese pharmaceuticals: does sub-national marketization matter? Evidence of cross-province acquisitions by Guangdong firms

This article assesses the influence of sub-national marketisation on the equity share choice in mergers and acquisitions. Focusing on domestic acquisitions, we examine the relationship between marketisation of the target firm and the acquirer firm's equity share choice by Guangdong (GD) firms in pharmaceuticals. Our sample consists of 53 domestic acquisitions in China of which acquirers are located in GD province and targets are located all over China. Findings confirm that differences exist in equity share choice based on different sub-national marketisation within China. Sub-national marketisation has significant association with equity share in cross-province acquisitions. An acquirer will more likely opt for partial shares in the acquired firm than full shares when acquiring a firm across provinces.