Empirical analysis reveals reduced long-term M&A performance following impression offsetting in Chinese acquiring firms, highlighting strategic distraction behind risky deals.
Using 666 large acquisitions in China, we find that impression offsetting, proxied by unrelated positive announcements around mergers and acquisitions (M&As), negatively predicts long-term M&A performance, consistent with expectation violation theory. The warning effect is stronger for risky deals (cash‑financed M&As) and high-risk regions, and is more pronounced among non-state-owned enterprises, firms with high managerial power, high CEO confidence, and with high liquidity investors. The results help stakeholders identify the information cloak behind value-creation M&As.
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Wu et al. (2026) studied this question.
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