Huang, Wei, Zhang, Hong, Goyal, Abhinav 
ORCID: 0000-0002-9859-2117 and Laws, Jason ORCID: 0000-0002-0277-2018
(2019)
Internal capital market mergers in weak external market environment: An emerging market evidence.
International Journal of Finance and Economics, 24 (4).
pp. 1486-1505.
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Abstract
Using Chinese split‐share structure reform as backdrop, we study the alternative theories explaining the change in objectives of internal capital markets (ICMs) after regulatory intervention. Focusing on related party merger and acquisitions, as the primary form of ICM transactions in China, we document significantly positive performance improvement among the acquiring firms around related party than nonrelated party merger and acquisitions in the period following the split‐share structure reform. This evidence is particularly stronger among acquirers with lower institutional shareholding. Our findings are invariant to the length of performance evaluation window, matched samples, model specifications, acquirers' ownership structure, and business group affiliations. After controlling for alternative channels of tunnelling and propping, contrary to the popular belief, our findings support the bright‐side view of ICMs postregulatory intervention in an emerging market set‐up.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | China, internal capital market, M&A, related party, tunnelling |
| Depositing User: | Symplectic Admin |
| Date Deposited: | 05 Nov 2019 09:22 |
| Last Modified: | 19 Jan 2023 00:20 |
| DOI: | 10.1002/ijfe.1739 |
| Related URLs: | |
| URI: | https://livrepository.liverpool.ac.uk/id/eprint/3060563 |
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