Financial constraints and investment thirst in Chinese reverse merger companies

Abstract

Using a hand‐collected data set of Chinese reverse mergers (RM) between 2006 and 2015, we find that financial constraints are more serious and investment thirst higher for RM companies as compared with initial public offering (IPO) companies. For state‐owned enterprises (SOEs), listing via a RM or an IPO does not impact the level of financial constraints post‐listing, while SOE RMs have higher investment thirst than SOE IPOs. By contrast, non‐SOE RMs are under more financial constraints and have higher investment thirst than non‐SOE IPOs. These differences are not presented during the 4 Trillion Yuan stimulus period between 2008 and 2010.

R&D Investments and Firm Value: Evidence from China

“…Second, in China, both state-owned enterprises (SOEs) and private firms coexist. In particular, SOEs account for a substantial proportion of China's economy and their political connection with the Chinese government likely facilitate investment financing [15,16], enabling them to invest in more R&D. Similarly, Wu [17] points out that SOEs are likely to engage in more R&D investments.We test a non-linear relationship between R&D investments and firm value using a sample of 563 Chinese listed firms between 2005 and 2013. In our analyses, we employ three estimation specifications, such as pooled ordinary least squares (OLS) regressions, fixed-effect panel regressions, and dynamic panel generalized method of moments (GMM) estimators.…”

“…Second, in China, both state-owned enterprises (SOEs) and private firms coexist. In particular, SOEs account for a substantial proportion of China's economy and their political connection with the Chinese government likely facilitate investment financing [15,16], enabling them to invest in more R&D. Similarly, Wu [17] points out that SOEs are likely to engage in more R&D investments.…”

The crowding out effect of booming real estate markets on corporate TFP: evidence from China

“…First, SOE managers may dislike innovation for, unlike their counterparts in privately controlled listed firms, they lack either the incentives or the ability to innovate (Megginson and Netter, ). Second, it is generally believed that SOEs are more politically connected (Cheng et al ., ; Liu et al ., ) and may have greater access to the real estate market if they want to invest in real estate for higher profits. Hence, it is assumed that housing price appreciation has a stronger (or more negative) impact on TFP for SOEs than for non‐SOEs.…”

Machine Learning and Expert Judgement: Analyzing Emerging Topics in Accounting and Finance Research in the Asia–Pacific

“…Financial constraints and investment thirst between reverse merger firms and IPO firms are analyzed in Cheng et al . (). Corporate distress is analyzed by Jiang and Jones (), while financial literacy and risky asset holdings are studied by Liao et al .…”