Gambling Attitudes and Earnout Contracting in M&A Transactions: Evidence From China
Abstract
ABSTRACT This paper examines the causal link between local gambling attitudes and the use of earnouts in mergers and acquisitions. Using a large sample of Chinese M&As, we find that deals are more likely to include earnout provisions when targets are located in regions with stronger gambling preferences. The effect strengthens with information complexity but weakens under greater external monitoring. Moreover, targets in gambling‐prone regions obtain higher acquisition premiums when earnouts are used, while acquirers show no improvement in announcement returns. Overall, our findings highlight the behavioural dimension of financial contracting and the influence of cultural norms on corporate decisions.
Fields of Study & Subjects
Corporate Finance and Governance
Private Equity and Venture Capital
Financial Markets and Investment Strategies
Publication details
- Journal / source
- Accounting and Finance
- Volume
- 66
- Issue
- 2
- Pages
- 1800–1832
- Publication date
- 29 January 2026
- Language
- EN