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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.


Agyenim Boateng

XiaoGang Bi

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.

Journal Article Type Article
Acceptance Date Jun 11, 2021
Online Publication Date Jul 1, 2021
Publication Date 2022-07
Deposit Date Nov 18, 2021
Publicly Available Date Nov 19, 2021
Journal British Journal of Management
Print ISSN 1045-3172
Electronic ISSN 1467-8551
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 33
Issue 3
Pages 1412-1431
Public URL


Ownership Type, Home‐Country Government‐Directed Investment Policies And Firm Value In Strategic Sectors: Evidence From Chinese Acquiring Firms (290 Kb)

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Copyright Statement
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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