Abstract/Summary

This thesis comprises three empirical essays that explore how institutional environments affect firms’ cross-border strategic behaviour and financial conduct. Particularly, the thesis provides new insights into the mechanisms through which climate change related risks, offshore relationships, and societal trust influence corporate decisions. The first essay (Chapter 3) examines the role of greenhouse gas (GHG) emissions in shaping a firm’s international acquisition choices. Specifically, it investigates how U.S. firms’ carbon emissions levels influence their cross-border mergers and acquisitions (M&A). The findings show that firms with higher intensity of emissions are more likely to pursue cross-border deals, especially in countries with weaker environmental regulations, lower disclosure standards, and reduced transparency. This pattern intensifies after the Paris Agreement and is consistent with motives of regulatory arbitrage. The second essay (Chapter 4) investigates how offshore activities affect cross-border acquisitions. Using a novel text-based measure of offshore engagement based on Hoberg and Moon (2017, 2019), the study finds that firms are significantly more likely to acquire targets in countries where they have prior offshore trading ties. This effect is stronger in countries with better information environments. However, the results show no significant improvement in deal performance or return on assets (ROA) following the acquisitions. The third essay (Chapter 5) turns to the influence of informal institutions by examining the relationship between regional societal trust and earnings management among Chinese listed firms. The analysis reveals that firms headquartered in high-trust regions are less likely to engage in opportunistic earnings manipulation. This effect is more pronounced in regions with greater market development and better information quality, and weaker where media scrutiny is higher. Collectively, these essays contribute to a deeper understanding of how institutional asymmetries across countries and regions influence firm-level strategies, particularly in the domains of cross-border expansion and financial reporting behaviour.