Browsing by Author "Du, Min"

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    Corporate governance in China: Regulatory reforms and policies, in Corporate Governance in Developing and Emerging Markets
    (Routledge, 2017-02-20) Boateng, Ageynim; Du, Min
    Corporate governance, which is defined as the structure of rights and responsibilities among the various parties who have a stake in a business organisation (Aguilera and Jackson, 2003), has attracted immense interest from academics, practitioners and regulatory authorities of both developed and developing countries in recent years (Cheung et al., 2008; Kim and Lu, 2013). The interest stems from a number of reasons including the recent corporate scandals in Europe and the United States; the financial crisis and the increasing integration of the world economy. In the context of China, the main driving force behind the corporate governance reforms is perhaps the market reforms that have transformed China’s centrally planned economy into a market-oriented economy (Li, 2013; Chen, 2015). As part of the enterprise reforms, China has privatised or transferred part of the ownership of firms from the state to the public and private owners, such as individuals, management, institutions, employees and foreign investors. This process diversifies the ownership structure and attracts international investments, which makes corporate governance a significant issue (Rajagopalan and Zhang, 2008; Huang and Zhu, 2015). Research evidence suggests that there is a link between and causality among law, finance and economic growth at the country, industry, and firm levels (see, Demirguc-Kunt and Maksimivic, 1998; Levine, 1999; Beck and Levine, 2002). A number of scholars including Claessens (2003); Cheung et al. (2008); Clarke and Du (1998); Habib and Jiang (2015); and Lee (2015) have rendered support regarding the positive relationship between corporate governance and growth. For example, better corporate governance leads to increased access to external financing, lower cost of capital, increased foreign direct investments, better performance and growth (La Porta et al., 1999; Claessens, 2003). Consequently conventional wisdom suggests that corporate governance systems in emerging countries should focus on providing an effective legal system and strong institutions to increase growth.
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    Cultural Distance and Value Creation of Cross-border M&A: The Moderating Role of Acquirer Characteristics
    (Elsevier, 2018-12-27) Boateng, Agyenim; Du, Min; Bi, Xiaogang; Lodorfos, George
    This paper examines the effects of culture and the interaction between cultural distance and salient acquirer characteristics on value creation of acquiring firms based on a sample of 209 firms over the period of 1998-2012. The findings indicate that Chinese acquirer experience wealth gains ranging from 0.45% – 1.49% over a 10 day event window. We find cultural distance to exert a negative influence on value creation of acquirers in the short-and long-term. However, the negative returns are significant only in the short-term but not in the long-term. Further evidence shows that acquirer large size, prior experience and high Tobin’s q positively moderate the link between cultural distance and value creation. The results suggest that the effect of culture distance is conditioned by the acquirer size, prior experience and Tobin’s q implying that acquirer resources and managerial capabilities are important in dealing with and overcoming cross-border mergers and acquisitions (CBM&A) cultural challenges.
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    Economic Policy Uncertainty and Cost of Capital: The Mediating Effects of Foreign Equity Portfolio Flow
    (Springer, 2022-03-12) Kwabi, Frank; Owusu-Manu, Samuel; Boateng, Agyenim; Ezeani, Ernest; Du, Min
    We investigate whether economic policy uncertainty and the interaction of foreign equity portfolio flow and economic policy uncertainty impact the cost of capital. Using panel data of 20 countries from 2001 to 2018, we find economic policy uncertainty to exert a positive effect on the cost of capital. However, the interaction between foreign equity portfolio flow and economic policy uncertainty has a negative effect on the cost of capital, demonstrating that, the combined effect of foreign equity portfolio flow and economic policy uncertainty has the opposite effect (i.e., reduces the cost of capital). Our results are robust to alternative specifications and endogeneity.
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    Explaining the surge in M&A as an entry mode: home country and cultural influences
    (Emerald Publishing Limited, 2017) Boateng, Agyenim; Du, Min; Wang, Y.; Wang, C.; Ahammad, Mohammad F.
    Purpose – The purpose of this paper is to examine the trends, patterns and the impact of cultural and home country macroeconomic influences on Chinese cross-border mergers and acquisitions (CBM&A) as foreign entry strategy for the period of 1998-2011. Design/methodology/approach – Using three regression models, namely, ordinary least squares, the random effects and fixed effects to examine the impact of home country macroeconomic and cultural factors on CBM&A outflows as an entry mode of Chinese firms. The authors check the robustness of the results using system GMM. Findings – The findings suggest that CBM&A as a preferred mode of market entry provides a means for obtaining strategic resources to develop competitive advantages for the Chinese emerging market firms. The regression results indicate that home country macroeconomic and cultural variables, including gross domestic product (GDP), liquidity, interest rates, inflation, acquisitions in resource seeking sectors and cultural distance play an important role in explaining the trends of CBM&A outflows by the Chinese firms. Research limitations/implications – The results imply that government support to emerging market multinational enterprises (EMEs) to acquire strategic assets and economic policies in the home country play an important role in shaping international expansion behaviour of EMEs through CBM&A. The study demonstrates that outward investments of EMEs are partly a function of the level of economic policies and government support at home. The limitation is that most of the Chinese CBM&A transactions took place in Asia/Pacific locations. Future studies appear warranted if new data become available. Originality/value – The study demonstrates how the institutions, strategic asset seeking with government support and economic policies in the home country play important role in shaping international expansion behaviour of emerging market enterprises through CBM&A thereby contributing to the political economy literature and institutional theory. More importantly, the study shows that the level of economic policies and development such as GDP, money supply, interest rates, inflation of the home country are important for EME growth in the international market
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    Home country macroeconomic factors on outward cross-border mergers and acquisitions: Evidence from the UK
    (Elsevier, 2013-08-19) Boateng, Ageynim; Hua, Xiuping; Uddin, Moshfique; Du, Min
    In this paper, we examine the dynamic effects of key macroeconomic factors on the UK crossborder mergers and acquisitions (CBM&A) outflows over the period 1987–2008. Using a seven variable vector autoregressive/vector error correction models (VAR/VECM), the study finds that a number of home country macroeconomic variables, including GDP, broad money supply, stock prices and real effective exchange rate exert a positive and significant influence in explaining the CBM&A outflows by the UK firms. However, inflation rates and interest rates tend to have a negative impact on the volume of CBM&A. The findings support the notion that home country macroeconomic factors can create advantages to improve the outward Cross-border M&A activities.
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    The Impact of CEO Compensation and Excess Reserves on Bank Risk-taking: The Moderating Role of Monetary Policy
    (Springer, 2021-06-17) Boateng, Agyenim; Nguyen, Vu Hong Thai; Du, Min; Kwabi, Frank
    We examine the effects of CEO compensation, excess reserves, and role of monetary policy on bank risk-taking behaviour based on a sample of 88 Chinese commercial banks over the period of 2003-2014. We find evidence that suggests that incentives present in CEO compensation contracts and excess reserves exert a positive and significant impact on risk-taking and credit risk. However, we find that the positive effects of CEO compensation and excess reserves on risk-taking are cancelled out by the interaction of CEO compensation and excess reserves. Further analysis suggests that the central bank’s monetary policy serves to restrain the effects of an interaction between CEO compensation and excess reserves on bank risk-taking and credit risk. This study extends the theoretical model, which indicates that excess reserves are a major source of credit risk and notes that the effects of incentives inherent in CEO compensation contracts and excess reserves on bank risk policies are contingent on the monetary policy pursued by the central bank in China’s emerging economy
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    The impact of state ownership, formal institutions and resource seeking on acquirers’ returns of Chinese M&A
    (Springer, 2015-02-04) Boateng, Agyenim; Newton, D.; Du, Min
    This study investigates the long-term acquirer returns of Chinese cross-border mergers and acquisitions (CBM&A) over the period of 1998-2008. Using Buy and Hold and Calendar Time methods, we find that Chinese acquiring firms experience negative returns ranging from 2.92% to 10.80% in 12-month and 60-month post-event periods respectively. Regarding the factors influencing returns, state ownership (SOE), interaction between R&D and SOE, formal institutional distance, acquirer size have positive and significant impact on the long-term acquirer returns. However, interaction between tangible resources and SOE and acquirer cash holding appear to have negative and significant impact on long-term returns. Overall, our results suggest that the role of government through SOEs is an important source of value creation for CBM&A in Chinese emerging economy.
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    Integration of Financial Markets in Post Global Financial Crises and Implications for British Financial Sector: Analysis Based on A Panel VAR Model
    (Springer, 2017-03-29) Nasir, Muhammad Ali; Du, Min
    Abstract This study analyses the dynamics of integration among global financial markets in the context of Global Financial Crisis (2008) by employing a Panel Vector Autoregressive (VAR) model on the monthly data of nine countries and three markets from Jan 2003 to Oct 2015. It was found that there has been a shift in the association among the global financial markets since Global Financial Crisis (GFC). Moreover, the British financial sectors in Post- GFC world clearly showed a change in the association with the global financial sectors. Particularly, the emerging markets including China, Brazil and India showed a comparatively more significant impact on the UK financial sector implying the increased importance of the latter in the recent past. The German and USA financial sector also showed a change in its impact in the Post-GFC world. It showed that Germany and USA financial sectors have become competitive to the UK financial Sector as the surge in them lead to a relative response from the UK financial sector which could be associated with the portfolio adjustment.
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    Ownership type, home country government-directed investment policies, and firm value in strategic sectors: evidence from Chinese acquiring firms
    (Wiley, 2021-07-02) Boateng, Agyenim; Du, Min; Bi, Xiaogang; Kwabi, Frank; Glaister, Keith W.
    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 (CBA). We find that CBA activities in strategic sectors encouraged by the home country government through its investment policies experience significant increase in 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 (SOEs) appear to outperform private-owned enterprises (POEs). 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.
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    State Ownership, Institutional Effects and Value Creation in Cross-border Mergers & Acquisitions by Chinese Firms
    (Elsevier, 2014-10-30) Boateng, Agyenim; Du, Min
    This paper considers the effects of state ownership and institutional influences on value creation through cross-border mergers and acquisitions by Chinese firms during the period using a sample of 468 firms. The findings indicate that Chinese bidders experience wealth gains ranging from 0.4771% to 1.5210% over 10-day event window. The cross-sectional analysis indicates that state ownership, formal institutional distance, reforms in the foreign currency approval system exert significant impact on shareholder value. By considering the state ownership and institutions, this study provides evidence that government and institutions play a huge role in value creation of emerging market firm internationalisation through cross-border mergers & acquisitions (CBM&A)