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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.