Title

Post-takeover financing activities under financial repression : evidence from China

Document Type

Journal article

Source Publication

Asia-Pacific Journal of Financial Studies

Publication Date

6-1-2012

Volume

41

Issue

3

First Page

313

Last Page

346

Keywords

China, Financial repression, Takeovers

Abstract

In Chinas state-dominated financial system, many firms, especially non-state-owned or private organizations, face serious restrictions in gaining access to bank and equity market financing. This kind of highly discriminatory financial repression policy has induced some unique post-takeover financing activities, which are consistent with the desire to acquire firms in order to capitalize on their privileges in getting access to external finance. Specifically, takeovers by acquirers facing more serious financing obstacles (private acquirers) tend to show less salient symptoms of tunneling and display patterns of more efficient investment than takeovers by acquirers suffering less serious financing obstacles (state acquirers). Market reaction analysis suggests that these takeovers pose different implications for acquirers shareholder value, with takeovers by private acquirers being viewed as value enhancing but takeovers by state acquirers being viewed as value reducing.

DOI

10.1111/j.2041-6156.2012.01075.x

Print ISSN

20419945

E-ISSN

20416156

Publisher Statement

Copyright © 2012 Korean Securities Association

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Full-text Version

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Recommended Citation

Du, J., Rui, O. M., & Wong, S. M. L. (2012). Post-takeover financing activities under financial repression: Evidence from China. Asia-Pacific Journal of Financial Studies, 41(3), 313-346. doi: 10.1111/j.2041-6156.2012.01075.x