Effects of Foreign Acquisitions on Financial constraints, Productivity and Investment in R&D of Target Firms in China
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.
The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.
Citation : Chen, Y., Hua, X., Boateng, A. (2016) Effects of Foreign Acquisitions on Financial constraints, Productivity and Investment in R&D of Target Firms in China. International Business Review, 26 (4), pp.640-651.
ISSN : 0969-5931
Research Institute : Finance and Banking Research Group (FiBRe)
Peer Reviewed : Yes