Topic:The Liability of Opaqueness: State Ownership and the Likelihood of Deal Completion in International Acquisitions

Speaker：Jiatao LI

Site：B127

Time： 9：30—11:30 June 16,2017

Abstract：

State-owned enterprises (SOEs) are often less transparent and have more complex organizational structures than other types of firms. This opaqueness tends to generate political resistance when SOEs undertake cross-border acquisitions. Data on attempted foreign acquisitions by Chinese firms were analyzed to compare the likelihood of deal completion between SOEs and firms with other forms of ownership. The SOEs’ completion rate was 14% lower than that of other firms. Their disadvantage was shown to be less when they could provide credible signals by being publicly–listed (though only on an exchange in a well-developed economy and when they hired reputable auditors), having a better past record and hiring respected financial advisors. Overall, the evidence confirms that Chinese SOEs face greater resistance than other Chinese firms in international acquisitions, and their opaqueness aggravates the resistance.