Corporate Digital Transformation and M&A Efficiency: Evidence Based on Chinese Listed Companies

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

Thank you for the opportunity to review this paper. It covers an interesting topic with good potential to contribute to existing literature if the below concerns are addressed:

1. The motivations for conducting this research can be improved. For example, authors should engage in more detailed discussion explaining the limitations of existing theoretical and empirical literature and how this study will address such limitations. Further, authors are urged to explain why China is an interesting context to be examined.

2. The developed hypotheses need to be improved by using theory/ies to develop each research hypothesis. Further, the currently developed hypotheses are general and can apply to any context. Therefore, authors are encouraged to refer to the Pakistani context when developing their hypotheses. In addition, authors should explain why capital market mispricing and manager agency problem as intermediary variables.

3. The period of analysis needs to be justified. Why the study started in 2007 and ended in 2021? Also, sample section procedures need to be further explained. For example, why firms with negative net assets and net profit are excluded? In addition, authors need to explain which variables have been winsorized.

4. The way manager agency problem measured using shareholding ratios of largest shareholder doesn't capture manager-agent conflict and more appropriate proxy is needed. 

5. The discussion of the obtained results, particularly descriptive statistics can be improved by comparing the obtained findings with those of past studies.

6. Finally, the conclusion is very short and can be improved by; (i) providing more discussion about the implications of the obtained findings; (ii) identifying more limitations; and (iii) providing more suggestions for future research.

Author Response

Yes， I have changed and correct your advice by adding more discussion and study limitations. 

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

This is an interesting article to study the role of  digital transformation in  merger and acquisition efficiency. Nonetheless there are lots improvement need to be done in order for article to make article more sound and readable.

Line 210 what is the rational to remove outliers?

Line 220-221: Please check the sentence for completeness and meaning.

Please provide a diagram to illustrate the study model and variables.

The research method section must mention techniques being used in a more illustrative way including rational for each technique. For instance, the heterogeneity analysis is not mentioned in this section.

No limitations and future work have been provided.

The study uses secondary data that must be corroborated with some other methods.

Comments on the Quality of English Language

Line 220-221: Please check the sentence for completeness and meaning.

Author Response

Yes, I have check the sentence of line 220-221 and correct into the "occurrent year", and explain and add the missing part into the limitations. 

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

Thank you for resubmitting the paper. However, my major concerns still have not fully addressed. For example, the motivations for conducting this research and authors have not explained the importance of conducting this research. They justified their focus on China because all authors are from China!! They need to provide more valid and robust justifications for their focus on the Chinese context. Also, the report indicates that my concerns about research motivations are addressed in section 1.2, but this is not the case and I don't see any arguments made in this section about the limitations of previous studies and how this paper contributes to the extant literature. 

Research hypotheses have not been improved based on my request in the previous round. 

Research design section still have not been improved. Why the study started in 2007 and ended in 2021? It's not sufficient to claim that this period is "covering most of the sensible and dramatic development of Chinese economy in financial market". For example, see this report from OECD (https://www.oecd.org/sti/inno/46663975.pdf), which suggest that China annual GDP growth was high in the period 2000 to 2008 compared with 2009 and following years. Similarly, the measurement of manager agency problem still not well justified. 

Other sections, including discussion of the obtained results and conclusion can further be improved as suggested in my earlier review.  

Finally, I suggest proofreading the paper as there are many typos that can easily be eliminated. 

Author Response

Thank you for resubmitting the paper. However, my major concerns still have not fully addressed. For example, the motivations for conducting this research and authors have not explained the importance of conducting this research. They justified their focus on China because all authors are from China!! They need to provide more valid and robust justifications for their focus on the Chinese context. Also, the report indicates that my concerns about research motivations are addressed in section 1.2, but this is not the case and I don't see any arguments made in this section about the limitations of previous studies and how this paper contributes to the extant literature. 

Solution: Thanks for your feedback again. In order to improve the capital market regulatory policies by supporing with more factual basis from China, this paper conduct the research on clarifying the impact mechanism of digital transformation on M&A efficiency of listed companies. Taking the mergers and acquisitions of listed companies from 2007 to 2021 as a research sample, the influence mechanism of the digital transformation degree of companies on their M&A efficiency was studied. The research results show that the digital transformation of listed companies will improve their M&A efficiency.  

The reasearch motivations are addressed not only in section 1, but also in the abstract. In order to help enterprises to achieve high-quality development and improve the capital market regulatory policies by supporting with more factual basis from China, this paper conduct the research on clarifying the impact mechanism of digital transformation on M&A efficiency of listed companies. Moreover, this paper not only provide with more factual basis of concrete case from China, but also enrich the related empricial analysis on corporate digital transfrmation and M&A efficiency. 

Research hypotheses have not been improved based on my request in the previous round. 

Research design section still have not been improved. Why the study started in 2007 and ended in 2021? It's not sufficient to claim that this period is "covering most of the sensible and dramatic development of Chinese economy in financial market". For example, see this report from OECD (https://www.oecd.org/sti/inno/46663975.pdf), which suggest that China annual GDP growth was high in the period 2000 to 2008 compared with 2009 and following years. Similarly, the measurement of manager agency problem still not well justified. 

Solution: Thanks for your materials provide in the linkage website. To answer the question of why the study started in 2007 and end in 2021, there are two reasons. First, it is not only because this period is "covering most of the sensible and dramatic development of Chinese economy in financial market", but also because of the M&A cases and DIGITAL TRANSFORMATION cases are predominant than the previous years as your hints from 2000 to 2008 according to our data set. Also, we can make the period prolong as you want, but that will be another paper maybe in the future for our consideration.

Meanwhile, In recent years, the number of M&A and restructuring transactions and the transaction value of China's capital market have generally shown an upward trend. According to PwC's "2021 China M&A Market Review and 2022 Outlook" report, the number of M&A transactions in China in 2021 was 12,790, a year-on-year increase of 21%, which created a new high record. Though the growth in China's M&A market slowed down in 2022, with the value of M&A deals falling by 20% compared to 2021, but this figure still accounts for 15% of the global M&A transaction market. In recent years, the key role of digital economy in China's high-quality development has been continuously highlighted. The degree of digital transformation has increased the information content of the company's stock price and enhanced the ability of investors to discover value.

Other sections, including discussion of the obtained results and conclusion can further be improved as suggested in my earlier review.  

Finally, I suggest proofreading the paper as there are many typos that can easily be eliminated. 

Solution: Thanks for your feedback again. We have read through and checked all the possible improved places such as some typos.

Thanks again for your time, patience, consideration and positive feedback to make our paper better and better, though some defects cannot belittle virtues.

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

No more comments

Comments on the Quality of English Language

No more comments

Author Response

Thanks for your time and positive feedback. 

Round 3

Reviewer 1 Report

Comments and Suggestions for Authors

Thank you for addressing my major concerns. I am happy for the paper to be accepted.