The Digital Divide between Merging Parties and M&A Completion:Evidence from Listed Companies in China

摘要

There is a keyword problem in the development process of the digital economy, the digital divide, which not only deprives the disadvantaged groups of the right to access information and opportunities but also hinders the whole society from moving forward to informatization and intelligence. Taking the M&A from 2008-2022 as a sample, we adopt an empirical analysis method to examine how the digital divide affects the completion of M&A. The findings indicate that the digital divide inhibits the completion of M&A. Further analysis reveals that this inhibitory effect primarily exists when the acquirer’s overall digitization level lags behind that of the acquiree. Specifically, the negative impact is most pronounced when the acquirer falls behind the acquiree in both digital technology and digital application dimensions. Heterogeneity tests show that the digital divide exerts a stronger inhibitory effect in cross-location M&As, when the acquiree has lower information transparency, when the acquirer lacks extensive M&A culture, when the acquiree possesses a rich M&A culture, and when there is a substantial disparity in M&A culture between the two parties. there is no effect of the digital divide on the number of days to M&A completion. Additionally, we find that the digital divide does not significantly affect the number of days to M&A completion. This suggests that while digital asymmetry increases uncertainty and reduces the probability of deal closure, it does not prolong the procedural timeline, as the completion duration is predominantly governed by standardized legal, financial, and regulatory processes rather than digital integration challenges. We incorporate the characteristics of M&A parties into the literature on M&A by studying the digital divide between the two parties, which enriches the existing literature while better guiding companies to use digitalization to facilitate M&A completion.