Huanyu Ma, Man Zhang and Zimeng Luo
The role of common institutional ownership is becoming increasingly significant in China’s capital market. However, it remains unclear whether common institutional ownership plays…
Abstract
Purpose
The role of common institutional ownership is becoming increasingly significant in China’s capital market. However, it remains unclear whether common institutional ownership plays a synergistic or collusive role in China’s capital market. Therefore, the study examines the impact of common institutional ownership on the cost of equity capital within the specific context of China.
Design/methodology/approach
This study uses a sample of Chinese listed firms over the period 2007–2021. It mainly employs ordinary least squares regression to examine the relationship between common ownership and the cost of equity.
Findings
Common institutional ownership has a beneficial, synergistic and monitoring role in reducing a firm’s cost of equity capital in the Chinese emerging market. Lowering business risks, reducing information risk and mitigating agency conflicts play a significant role in mediating the relationship between common institutional ownership and the cost of equity capital. The inhibitory effect of common institutional ownership on the cost of equity is more pronounced for non-SOEs, firms without government support and firms with lower investor attention. The study sheds a positive insight into the ongoing debate regarding the actual effect role of common ownership.
Originality/value
This study offers valuable insights into the ongoing debate regarding the practical implications of common institutional ownership, while also enriching the research on the factors that influence the cost of equity capital for firms. The conclusions hold significant practical implications for companies, investors and regulators.
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Abstract
Purpose
The purpose of this paper is to empirically examine the relationships between acquirer size and performance outcomes of the different process of acquisition in the Chinese context and the moderating effect of political connections on the size-performance relationship.
Design/methodology/approach
Building upon agency theory, the paper examines the relationship between acquirer size and acquisition announcement returns to find whether the acquirer size effect exists in China. Moreover, the paper investigates whether large firms can perform better in the long run arising from scale economy. Finally, the paper examines the moderating effect of political connections on the size-performance relationship. Accounting for the complexity of political connections in China, the paper uses two methods to capture political connections.
Findings
The paper finds that acquirer size plays a significant negative role on announcement returns, suggesting that the acquirer size effect also exists in China. However, acquirer size has a significant positive impact on long-term performance, indicating that large acquirers perform better in the integration process. Although no evidence shows that political connections can bring some off-setting benefits to acquirer size effect argued by Humphery-Jenner and Powell (2014), political connections, indeed, have a positive effect on mergers and acquisitions (M&As) announcement returns.
Originality/value
The paper contributes to the corporate characteristic, political connections and M&A performance literature. Due to agency problem and scale economy, the effect of firm size on acquisition performance varies with the stage of M&A. Political connections can bring some benefits to M&A deals.
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Jian Feng, Lingdi Zhao, Huanyu Jia and Shuangyu Shao
The purpose of this paper is to assess the effectiveness of the Silk Road Economic Belt (SREB) strategy and its role of industrial productivity in China.
Abstract
Purpose
The purpose of this paper is to assess the effectiveness of the Silk Road Economic Belt (SREB) strategy and its role of industrial productivity in China.
Design/methodology/approach
To identify the causal effect of this strategy on industrial sustainable development, the authors first use the slacks-based measure model to calculate industries’ total-factor productivity (TFP) considered with CO2 emissions as undesirable output on the provincial level. Then, the authors use the PSM-DID method to identify the difference of TFPs between provinces and industries before and after the implementation of SREB strategy.
Findings
However, the authors find that there is no difference or even a relative decrease in TFPs of industries in target provinces after the implementation of the strategy, which reveals that the SREB strategy does not play a positive role of the industries’ sustainable development in years of 2014 and 2015.
Originality/value
The value of this result is to identify the short-term impact of SREB strategy and to seek for probable causes and appropriate solutions.