Ownership Type, Home?Country Government?Directed Investment Policies and Firm Value in Strategic Sectors: Evidence from Chinese Acquiring Firms
Boateng, Agyenim; Du, Min; Bi, XiaoGang; Kwabi, Frank O.; Glaister, Keith W.
Dr Anna Du A.Du@napier.ac.uk
Frank O. Kwabi
Keith W. Glaister
Using data of Chinese acquirers in strategic sectors, we assess the role of home government and the effects of the interaction between ownership type and government-directed investment policies on acquiring firm value in cross-border acquisitions (CBAs). We find that CBA activities in strategic sectors encouraged by the home-country government through its investment policies experience significant increase in acquiring firm value. We also find that firms investing in government-designated strategic sectors generate wealth for acquirers, but contrary to efficiency logic rooted in agency theory, state-owned enterprises appear to outperform private-owned enterprises. Further analysis indicates that three financial incentives associated with government-directed policies – namely, interest-rate reduction, tax incentives and direct subsidies – constitute sources of firm value. Our results raise several policy implications, including the need for transparent and rule-based policies and governance systems to be developed and implemented by governments in the home and host countries to regulate state-supported firms investing in sensitive strategic sectors.
Boateng, A., Du, M., Bi, X., Kwabi, F. O., & Glaister, K. W. (2022). Ownership Type, Home?Country Government?Directed Investment Policies and Firm Value in Strategic Sectors: Evidence from Chinese Acquiring Firms. British Journal of Management, 33(3), 1412-1431. https://doi.org/10.1111/1467-8551.12538
|Journal Article Type||Article|
|Acceptance Date||Jun 11, 2021|
|Online Publication Date||Jul 1, 2021|
|Deposit Date||Nov 18, 2021|
|Publicly Available Date||Nov 19, 2021|
|Journal||British Journal of Management|
|Peer Reviewed||Peer Reviewed|
Ownership Type, Home?Country Government?Directed Investment Policies And Firm Value In Strategic Sectors: Evidence From Chinese Acquiring Firms
Publisher Licence URL
This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
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