The economic impact of corporate offshore investments : a Chinese perspective : a dissertation presented in fulfilment of the requirements of Doctor of Philosophy in Finance, College of Business, School of Finance and Economics, Massey University, New Zealand
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2023
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Massey University
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With the development of internationalization and globalization, outward foreign direct investment becomes a crucial factor for Chinese firms to engage with the world. This thesis investigates the economic impact of outward foreign direct investment by Chinese listed firms, consisting of two empirical essays on Chinese outward foreign direct investment.
The first essay investigates the impact of greenfield outward foreign direct investment (OFDI) on firm performance in Chinese listed firms. This study finds a significant increase in Tobin’s Q of firms with greenfield OFDI. The study empirically shows that the positive impact of greenfield OFDI on Tobin’s Q is more pronounced in non-state-owned enterprises (non-SOEs). Empirical evidence also suggests that engaging in greenfield outward foreign direct investment is associated with lower effective tax rates, higher analyst coverage, and upgraded analyst recommendations. Overall, this study provides new insights into the impact of greenfield OFDI on firms’ market-based performance and how political interference shapes the impact.
The second essay investigates the impact of common institutional ownership on Chinese firms’ outward foreign direct investment amounts and is the first study to document this impact. The study provides empirical evidence that institutional common owners experience significant positive firm outward foreign direct investment amounts. This positive impact is more pronounced in the presence of privately-owned institutional common owners. This study also suggests that the positive impact of common ownership on firms’ OFDI is in line with the coordination and monitoring effect of common owners. Overall, this study provides new insights regarding the impact of common owners on Chinese firms’ OFDI and sheds light on the drivers of firms’ outward foreign direct investments.
In sum, the results indicate that while undertaking OFDI would facilitate firm performance for Chinese listed firms, common institutional owners promote the underlying Chinese firms’ OFDI at the same time allowing these firms to enjoy the benefit of investing worldwide.