Abstract
This paper examines whether foreign acquisitions lessen financial constraints, improve investment in research & development (R&D) and productivity of the target firms in China based on a sample of 914 cross-border mergers and acquisitions (CBM&A) over the period of 1994-2011. Using investment to cash-flow sensitivity to measure financial constraints, we find that foreign acquisitions in China are associated with a reduction of target firms’ financial constraints, irrespective of the ownership type of the target firm. However, the extent of financial constraint reduction is pronounced for non-SOEs compared to state-owned enterprises (SOEs). This study also provides evidence that foreign acquisitions improve Chinese target firms’ productivity and investment in R&D.
Original language | English |
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Pages (from-to) | 640-651 |
Number of pages | 12 |
Journal | International Business Review |
Volume | 26 |
Issue number | 4 |
Early online date | 16 Dec 2016 |
DOIs | |
Publication status | Published - Aug 2017 |
Keywords
- acquisitions
- financial constraints
- investment funds