Make a promise: the valuation adjustment mechanism in Chinese private target acquisitions

The valuation adjustment mechanism (VAM) is a contingent-payment contractual arrangement used in the Chinese mergers and acquisitions (M&As) market. The ‘two-direction payment’ design of Chinese VAMs can reduce deal uncertainty and generate value, especially for poorly performing companies that can use VAM contracts to boost short-term performance. I find in this empirical investigation that acquirers applying VAM terms have significantly higher market returns after addressing endogeneity. I also document that poorly performing bidders sign larger VAM contracts, pay higher bid premiums and achieve higher operating performance, and which types of firms are more likely to adopt a VAM in transactions

Subsidized overexpansion of Chinese firms

This paper examines the economic consequences of public subsidies to listed firms in China. It reveals that public subsidies can significantly increase the chance of firm overinvestment. However, they do not necessarily resolve the underinvestment problem. These results appear robust when we test various types of subsidies separately, as well as when we analyze the influence of subsidies on the investment-Q sensitivity. Further investigation shows that dividend payout has an important moderating role in this relationship between subsidies and investment. Firms with subsidies, especially those that pay higher cash dividends, have lower future stock returns and valuations than comparable non-subsidized firms. Overall, the main findings of this paper signal a clear government failure to correct market failure in the Chinese capital market. © 201

Ownership Type, Home?Country Government?Directed Investment Policies and Firm Value in Strategic Sectors: Evidence from Chinese Acquiring Firms

Using data of Chinese acquirers in strategic sectors, we assess the role of home government and the effects of the interaction between ownership type and government-directed investment policies on acquiring firm value in cross-border acquisitions (CBAs). We find that CBA activities in strategic sectors encouraged by the home-country government through its investment policies experience significant increase in acquiring firm value. We also find that firms investing in government-designated strategic sectors generate wealth for acquirers, but contrary to efficiency logic rooted in agency theory, state-owned enterprises appear to outperform private-owned enterprises. Further analysis indicates that three financial incentives associated with government-directed policies – namely, interest-rate reduction, tax incentives and direct subsidies – constitute sources of firm value. Our results raise several policy implications, including the need for transparent and rule-based policies and governance systems to be developed and implemented by governments in the home and host countries to regulate state-supported firms investing in sensitive strategic sectors

Category Selectivity of Human Visual Cortex in Perception of Rubin Face–Vase Illusion

When viewing the Rubin face–vase illusion, our conscious perception spontaneously alternates between the face and the vase; this illusion has been widely used to explore bistable perception. Previous functional magnetic resonance imaging (fMRI) studies have studied the neural mechanisms underlying bistable perception through univariate and multivariate pattern analyses; however, no studies have investigated the issue of category selectivity. Here, we used fMRI to investigate the neural mechanisms underlying the Rubin face–vase illusion by introducing univariate amplitude and multivariate pattern analyses. The results from the amplitude analysis suggested that the activity in the fusiform face area was likely related to the subjective face perception. Furthermore, the pattern analysis results showed that the early visual cortex (EVC) and the face-selective cortex could discriminate the activity patterns of the face and vase perceptions. However, further analysis of the activity patterns showed that only the face-selective cortex contains the face information. These findings indicated that although the EVC and face-selective cortex activities could discriminate the visual information, only the activity and activity pattern in the face-selective areas contained the category information of face perception in the Rubin face–vase illusion

External Sources of Finance and Value Creation of Chinese Mergers & Acquisitions: Does Ownership Type Matter?

The file attached to this record is the author's final peer reviewed version.Purpose: This paper investigates the effects of external sources of finance and ownership type on value creation of Chinese acquiring firms. Design/Methodology Our dataset consists of domestic-listed mainland Chinese firms engaged in domestic M&A during the period 2004-2012. Standard event study methodology and a cross-sectional regression analysis are employed to examine the relationship between external finance, ownership type and value creation of the acquiring firms. Findings We find that whereas bank financing is positively related to the firm value of privately-owned enterprises (POEs), bank financing has a negative but insignificant influence on the firm value of state-owned enterprises (SOEs). Moreover, equity financing has a negative and significant effect on the value creation of SOE acquirers, however this appears not to be the case of POEs. Practical Implications The results suggest that the capital markets in China take into consideration the discriminatory and cheap access to bank loans available to SOEs as negative signals to stock markets which cause capital markets to punish SOEs through price depreciation. Conversely, capital markets reward POEs in respect of Chinese banks’ discrimination against POEs in bank financing. Limitations The study is limited to the relationship between the external sources of finance and stock price performance and ignores informal financing which is becoming a common source of external finance in emerging countries. Originality The results of this study show that external source of finance and ownership type influence acquiring firm value in an environment where corporate governance system is weak and banking sector is dominated by state banks. Further reforms in the financial sector, particularly, in the corporate governance system appear warranted

Study of the Antitumor Activity of Alveolar Macrophages after Transfected Human INF-γ Gene

Background and objective Alveolar macrophages (AMs) activated have the antitumor activity. The interferon-γ (INF-γ) is one of the stimulating factors. INF-γ can enhance the immune function of AMs in vitro. The aim of this study is to investigate the effect of human INF-γ gene on the antitumor activity of AMs when transfected into the alveolar macrophages (AMs) from the patients with lung cancer in vitro. Methods AMs obtained by brochoalveolar lavage were separated and transfected by INF-γ gene. RT-PCR and ELISA were applied to determine whether the transfection was successful. The levels of tumor necrosis factor α (TNF-α), nitric oxide (NO) and interleukin-1 (IL-1) produced by AMs and the killing activity of AMs against L1210 cells was detected respectively. Results Both RT-PCR and ELISA demonstrated that human INF-γ gene had been successfully transfected into AMs. When transfected by human INF-γ gene, the levels of TNF-α, NO and IL-1 produced by AMs from the patients with lung cancer and the killing activity of AMs against L1210 cells were significantly higher than those of the control groups. Conclusion Human INF-γ gene can enhance the antitumor activity of AMs when transfected into AMs from the patients with lung cancer

An Efficient and Improved Coronavirus Herd Immunity Algorithm Using Knowledge-Driven Variable Neighborhood Search for Flexible Job-Shop Scheduling Problems

By addressing the flexible job shop scheduling problem (FJSP), this paper proposes a new type of algorithm for the FJSP. We named it the hybrid coronavirus population immunity optimization algorithm. Based on the characteristics of the problem, firstly, this paper redefined the discretized two-stage individual encoding and decoding scheme. Secondly, in order to realize the multi-scale search of the solution space, a multi-population update mechanism is designed, and a collaborative learning method is proposed to ensure the diversity of the population. Then, an adaptive mutation operation is introduced to enrich the diversity of the population, relying on the adaptive adjustment of the mutation operator to balance global search and local search capabilities. In order to realize a directional and efficient neighborhood search, this algorithm proposed a knowledge-driven variable neighborhood search strategy. Finally, the algorithm’s performance comparison experiment is carried out. The minimum makespans on the MK06 medium-scale case and MK10 large-scale case are 58 and 201, respectively. The experimental results verify the effectiveness of the hybrid algorithm

Cultural distance and value creation of cross-border M&A: The moderating role of acquirer characteristics

This paper examines the effects of culture and the interaction between cultural distance and salient acquirer characteristics on value creation of acquiring firms based on a sample of 209 firms over the period of 1998–2012. The findings indicate that Chinese acquirer experience wealth gains ranging from 0.45%–1.49% over a 10 day event window. We find cultural distance to exert a negative influence on value creation of acquirers in the short-and long-term. However, the negative returns are significant only in the short-term but not in the long-term. Further evidence shows that acquirer large size, prior experience and high Tobin's q positively moderate the link between cultural distance and value creation. The results suggest that the effect of culture distance is conditioned by the acquirer size, prior experience and Tobin's q implying that acquirer resources and managerial capabilities are important in dealing with and overcoming cross-border mergers and acquisitions (CBM&A) cultural challenges