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
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
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