Financial constraints and investment thirst in Chinese reverse merger companies

Zijian Cheng, Grant Fleming, Zhangxin Frank Liu

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)1315-1347
Number of pages33
JournalAccounting and Finance
Volume57
Issue number5
DOIs
Publication statusPublished - 1 Dec 2017

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