“Making International Acquisition Ownership Decision: Enlightened by the Public Thermostat Analogy” by Professor Daphne W. Yiu
Department of Management
Faculty of Business Administration
Chinese University of Hong Kong
We advocate that public sentiment, a cognitive-normative and an affective informal institution, plays a prominent role when formal institutions advance. With improved information dissemination and socialization that instills generalized morality, and collective instincts and emotions, public sentiment can be mobilized quickly and exert powerful institutional pressure on MNCs. Using the public thermostat analogy, we posit that MNC adjusts the levels of foreign acquisition ownership according to host country’s public sentiment. Using a sample of 413 acquisition deals from 22 foreign countries into China during 2010 and 2017 and a sentiment analysis of 100,902 blog posts, we find that host country’s public sentiment toward the acquiring firm’s home country is positively related to acquisition ownership levels, and moderates the effects of host region’s marketization levels.
