Does Broadband Infrastructure Affect Corporate Mergers and Acquisitions? Quasi-Natural Experimental Evidence from China

Although numerous studies have shown that information asymmetry is one of the essential reasons hindering corporate merger and acquisition (M&A) activities, little attention is paid on the impact of broadband infrastructure on corporate M&A form from an information asymmetry perspective. Using the shock of “Broadband China” policy, we conduct difference-in-differences estimations to investigate the causal effects of broadband infrastructure on corporate M&A. We find that broadband infrastructure significantly increases corporate M&A, which remains robust after a series of robustness checks. Further analysis shows that the underlying mechanism is alleviating information asymmetry. Finally, the heterogeneity analysis shows that our results are significant mainly in the group with high regional market segmentation, manufacturing industries, and non-state enterprises. Overall, this study enriches the research on the driving factors of M&A at the firm level and provides a micro-level evaluation of economic consequences of broadband infrastructure