Financial constraints and investment thirst in Chinese reverse merger companies | Zendy

Cheng Zijian | Zendy; Fleming Grant | Zendy; Liu Zhangxin Frank | Zendy

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Financial constraints and investment thirst in Chinese reverse merger companies

Author(s) -

Cheng Zijian,

Fleming Grant,

Liu Zhangxin Frank

Publication year - 2017

Publication title -

accounting and finance

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.645

H-Index - 49

eISSN - 1467-629X

pISSN - 0810-5391

DOI - 10.1111/acfi.12324

Subject(s) - initial public offering , thirst , business , listing (finance) , investment (military) , finance , stimulus (psychology) , financial system , monetary economics , economics , psychology , political science , medicine , politics , law , psychotherapist

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 ( SOE s), listing via a RM or an IPO does not impact the level of financial constraints post‐listing, while SOE RM s have higher investment thirst than SOE IPO s. By contrast, non‐ SOE RM s are under more financial constraints and have higher investment thirst than non‐ SOE IPO s. These differences are not presented during the 4 Trillion Yuan stimulus period between 2008 and 2010.

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