Post-takeover financing activities under financial repression : evidence from China

Julan DU, Oliver M. RUI, Man Lai, Sonia WONG

Research output: Journal PublicationsJournal Article (refereed)peer-review

1 Citation (Scopus)


In Chinas state-dominated financial system, many firms, especially non-state-owned or private organizations, face serious restrictions in gaining access to bank and equity market financing. This kind of highly discriminatory financial repression policy has induced some unique post-takeover financing activities, which are consistent with the desire to acquire firms in order to capitalize on their privileges in getting access to external finance. Specifically, takeovers by acquirers facing more serious financing obstacles (private acquirers) tend to show less salient symptoms of tunneling and display patterns of more efficient investment than takeovers by acquirers suffering less serious financing obstacles (state acquirers). Market reaction analysis suggests that these takeovers pose different implications for acquirers shareholder value, with takeovers by private acquirers being viewed as value enhancing but takeovers by state acquirers being viewed as value reducing.
Original languageEnglish
Pages (from-to)313-346
Number of pages34
JournalAsia-Pacific Journal of Financial Studies
Issue number3
Publication statusPublished - 1 Jun 2012


  • China
  • Financial repression
  • Takeovers

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