Abstract:
For the recent rapid growth in China’s overseas mergers and acquisitions(M&A) , mainstream opinions believe it’s driven by the growing international competitiveness of Chinese firms, namely “competitive advantage hypothesis”. However, the traditional “competitive advantage hypothesis” cannot explain numerous stylized facts of China’s overseas M&A. To figure out the reasons behind the violation of the stylized facts and to discover the driven factors behind China’s M&A, this paper argues that we can not ignore the crucial role played by the domestic and foreign asset price, After illustrating the“price hypothesis”thoroughly and using the country-industry-year level data, we test the two different theoretical hypotheses discussed above. Results find no evidence supporting the“competitive advantage hypothesis”, but confirm the“price hypothesis”.We further prove our views by mechanism analysis and robustness check.
Aguiar, M. and G. Gopinath, 2005. “Fire-Sale Foreign Direct Investment and Liquidity Crises.” Review of Economics and Statistics, 87(3):439~452.
Aguiar, M. and G. Gopinath, 2005. “Fire-Sale Foreign Direct Investment and Liquidity Crises.” Review of Economics and Statistics, 87(3):439~452.
[8]
Alquist, R., R. Mukherjee, and L. Tesar, 2013. “Fire-Sale FDI or Business as Usual?” NBER Working Paper, No.18837.
Alquist, R., R. Mukherjee, and L. Tesar, 2013. “Fire-Sale FDI or Business as Usual?” NBER Working Paper, No.18837.
[9]
Baker, M., C. F. Foley, and J. Wurgler, 2009. “Multinationals as Arbitrageurs: the Effect of Stock Market Valuations on Foreign Direct Investment.” Review of Financial Studies, 22(1):337~369.
Baker, M., C. F. Foley, and J. Wurgler, 2009. “Multinationals as Arbitrageurs: the Effect of Stock Market Valuations on Foreign Direct Investment.” Review of Financial Studies, 22(1):337~369.
[10]
Baker, M., J. C. Stein, and J. Wurgler, 2003. “When Does the Market Matter? Stock Prices and the Investment of Equity-Dependent Firms.” Quarterly Journal of Economics, 118(3):969~1005.
Baker, M., J. C. Stein, and J. Wurgler, 2003. “When Does the Market Matter? Stock Prices and the Investment of Equity-Dependent Firms.” Quarterly Journal of Economics, 118(3):969~1005.
[11]
Balassa, B., 1965. “Trade Liberalization and ‘Revealed’ Comparative Advantage.” Manchester School, 33(2): 99~123.
Balassa, B., 1965. “Trade Liberalization and ‘Revealed’ Comparative Advantage.” Manchester School, 33(2): 99~123.
[12]
Blundell, R., R. Griffith, and Van J. Reenen, 1995. “Dynamic Count Data Models of Technological Innovation.” Economic Journal, 105(429):333~344.
Blundell, R., R. Griffith, and Van J. Reenen, 1995. “Dynamic Count Data Models of Technological Innovation.” Economic Journal, 105(429):333~344.
[13]
Brakman, S., H. Garretsen, Van C. Marrewijk, and Van A. Witteloostuijn, 2013. “Cross-Border M&A Activity and Revealed Comparative Advantage in Manufacturing Industries.” Journal of Economics and Management Strategy, 22(1):28~57.
Brakman, S., H. Garretsen, Van C. Marrewijk, and Van A. Witteloostuijn, 2013. “Cross-Border M&A Activity and Revealed Comparative Advantage in Manufacturing Industries.” Journal of Economics and Management Strategy, 22(1):28~57.
[14]
Buckley, P. J., L. J. Clegg, A. R. Cross, X. Liu, H. Voss, and P. Zheng, 2007. “The Determinants of Chinese Outward Foreign Direct Investment.” Journal of International Business Studies, 38(4):499~518.
Buckley, P. J., L. J. Clegg, A. R. Cross, X. Liu, H. Voss, and P. Zheng, 2007. “The Determinants of Chinese Outward Foreign Direct Investment.” Journal of International Business Studies, 38(4):499~518.
[15]
Cai, K. G., 1999. “Outward Foreign Direct Investment: A Novel Dimension of China’s Integration into the Regional and Global Economy.” China Quarterly, 160:856~880.
Cai, K. G., 1999. “Outward Foreign Direct Investment: A Novel Dimension of China’s Integration into the Regional and Global Economy.” China Quarterly, 160:856~880.
[16]
Caves, R. E., 1996, Multinational Enterprise and Economic Analysis. Published by Cambridge University Press.
Caves, R. E., 1996, Multinational Enterprise and Economic Analysis. Published by Cambridge University Press.
[17]
Chinn, M. D. and H. Ito, 2006. “What Matters for Financial Development? Capital Controls, Institutions, and Interactions.” Journal of Development Economics, 81(1):163~192.
Chinn, M. D. and H. Ito, 2006. “What Matters for Financial Development? Capital Controls, Institutions, and Interactions.” Journal of Development Economics, 81(1):163~192.
[18]
Coeurdacier, N., De R. A. Santis, and A. Aviat, 2009. “Cross-Border Mergers and Acquisitions and European Integration.” Economic Policy, 24(57):56~106.
Coeurdacier, N., De R. A. Santis, and A. Aviat, 2009. “Cross-Border Mergers and Acquisitions and European Integration.” Economic Policy, 24(57):56~106.
[19]
Dunning, J. H., 1981. “Explaining the International Direct Investment Position of Countries: Towards a Dynamic or Developmental Approach”, Weltwirtschaftliches Archiv, 117(1):30~64.
[20]
Giovanni, J., 2005. “What Drives Capital Flows? The Case of Cross-Border M&A Activity and Financial Deepening.” Journal of International Economics, 65(1):127~149.
[19]
Dunning, J. H., 1981. “Explaining the International Direct Investment Position of Countries: Towards a Dynamic or Developmental Approach”, Weltwirtschaftliches Archiv, 117(1):30~64.
[21]
Graham, J. R., and C. R. Harvey, 2001. “The Theory and Practice of Corporate Finance: Evidence from the Field.” Journal of Financial Economics, 60(2):187~243.
[20]
Giovanni, J., 2005. “What Drives Capital Flows? The Case of Cross-Border M&A Activity and Financial Deepening.” Journal of International Economics, 65(1):127~149.
[22]
Hausman, J., B. H. Hall, and Z. Griliches, 1984. “Econometric Models for Count Data with an Application to the Patents-R&D Relationship.” Econometrica, 52(4):909~938.
[21]
Graham, J. R., and C. R. Harvey, 2001. “The Theory and Practice of Corporate Finance: Evidence from the Field.” Journal of Financial Economics, 60(2):187~243.
[23]
Head, K. and J. Ries, 2008. “FDI as an Outcome of the Market for Corporate Control: Theory and Evidence.” Journal of International Economics, 74(1):2~20.
[22]
Hausman, J., B. H. Hall, and Z. Griliches, 1984. “Econometric Models for Count Data with an Application to the Patents-R&D Relationship.” Econometrica, 52(4):909~938.
[24]
Hilbe, J. M., 2011, Negative Binomial Regression. Published by Cambridge University Press.
[23]
Head, K. and J. Ries, 2008. “FDI as an Outcome of the Market for Corporate Control: Theory and Evidence.” Journal of International Economics, 74(1):2~20.
[25]
Huang, Y., 2003, Selling China: Foreign Direct Investment during the Reform Era. Published by Cambridge University Press.
[24]
Hilbe, J. M., 2011, Negative Binomial Regression. Published by Cambridge University Press.
[26]
Kolstad, I. and A. Wiig, 2012. “What Determines Chinese Outward FDI?” Journal of World Business, 47(1):26~34.
[25]
Huang, Y., 2003, Selling China: Foreign Direct Investment during the Reform Era. Published by Cambridge University Press.
[27]
Krugman, P., 2000. “Fire-Sale FDI.” in Capital Flows and the Emerging Economies: Theory, Evidence and Controversies, Eds. by Edwards S., 43~58.
[26]
Kolstad, I. and A. Wiig, 2012. “What Determines Chinese Outward FDI?” Journal of World Business, 47(1):26~34.
[28]
Myers, S. C., 1984. “The Capital Structure Puzzle.” Journal of Finance, 39(3):574~592.
[27]
Krugman, P., 2000. “Fire-Sale FDI.” in Capital Flows and the Emerging Economies: Theory, Evidence and Controversies, Eds. by Edwards S., 43~58.
[29]
Neary, J. P., 2007. “Cross-Border Mergers as Instruments of Comparative Advantage.” Review of Economic Studies, 74(4): 1229~1257.
[28]
Myers, S. C., 1984. “The Capital Structure Puzzle.” Journal of Finance, 39(3):574~592.
[30]
Porter, M. E., 1990. “The Competitive Advantage of Notions.” Harvard business review 68(2):73~93.
[29]
Neary, J. P., 2007. “Cross-Border Mergers as Instruments of Comparative Advantage.” Review of Economic Studies, 74(4): 1229~1257.
[31]
Rhodes-Kropf, M. and S. Viswanathan, 2004. “Market Valuation and Merger Waves.” Journal of Finance, 59(6): 2685~2718.
[30]
Porter, M. E., 1990. “The Competitive Advantage of Notions.” Harvard business review 68(2):73~93.
[32]
Riedel, J., J. Jin, and J. Gao, 2007. How China Grows: Investment, Finance and Reform. Published by Princeton University Press.
[31]
Rhodes-Kropf, M. and S. Viswanathan, 2004. “Market Valuation and Merger Waves.” Journal of Finance, 59(6): 2685~2718.
[33]
Serdar D. I. and I. Erel, 2013. “Economic Nationalism in Mergers and Acquisitions.” Journal of Finance, 68(6):2471~2514.
[32]
Riedel, J., J. Jin, and J. Gao, 2007. How China Grows: Investment, Finance and Reform. Published by Princeton University Press.
[34]
Shleifer, A. and R. W. Vishny, 2003. “Stock Market Driven Acquisitions.” Journal of Financial Economics, 70(3):295~311.
[33]
Serdar D. I. and I. Erel, 2013. “Economic Nationalism in Mergers and Acquisitions.” Journal of Finance, 68(6):2471~2514.
[35]
Stoddard, O. and I. Noy, 2015. “Fire-Sale FDI? The Impact of Financial Crises on Foreign Direct Investment.” Review of Development Economics, 19(2):387~399.
[34]
Shleifer, A. and R. W. Vishny, 2003. “Stock Market Driven Acquisitions.” Journal of Financial Economics, 70(3):295~311.
[35]
Stoddard, O. and I. Noy, 2015. “Fire-Sale FDI? The Impact of Financial Crises on Foreign Direct Investment.” Review of Development Economics, 19(2):387~399.
