Financial constraints and investment thirst in Chinese reverse merger companies

Zijian Cheng; Grant Fleming; Zhangxin Frank Liu

doi:10.1111/acfi.12324

Financial constraints and investment thirst in Chinese reverse merger companies

Zijian Cheng, Grant Fleming, Zhangxin Frank Liu

Research output: Contribution to journal › Article › peer-review

16 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 language	English
Pages (from-to)	1315-1347
Number of pages	33
Journal	Accounting and Finance
Volume	57
Issue number	5
DOIs	https://doi.org/10.1111/acfi.12324
Publication status	Published - 1 Dec 2017

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N2 - 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.

AB - 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.

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KW - Initial public offering

KW - Investment Thirst

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Financial constraints and investment thirst in Chinese reverse merger companies

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