[Lecture] The Liability of Opaqueness: State Ownership and the Likelihood of Deal Completion in International Acquisitions
 
time: 2017-11-29

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

Speaker: Prof. Jiatao Li, Lee Quo Wei Professor of Business & Chair Professor of Management, The Hong Kong University of Science and Technology

Time: 3:00 pm, November 30, 2017

Venue: RM 109, Building 12, Wushan Campus


Introduction to the Speaker:

Prof. Jiatao Li is Lee Quo Wei Professor of Business, Chair Professor of Management, and Director of Center for Business Strategy and Innovation at Hong Kong University of Science and Technology. Prof. Li is also an elected Fellow of the Academy of International Business (AIB). He served as Head of the Management Department from 2006 to August 2017; Associate Dean (Faculty) of the HKUST Business School from 2009 to 2013; and Senior Associate Dean of the HKUST Business School from 2013 to July 2017. He served as Program Chair of the Strategic Management Society’s special conference held in Hong Kong in December 2016, and in the same year, was elected as Vice President of the AIB and the Program Chair of the 2018 AIB annual conference in the US.

Prof. Li is an expert on global business strategy. His current research interests are in the areas of organizational learning, strategic alliances, corporate governance, innovation, and entrepreneurship, with a focus on issues related to global firms and those from emerging economies. His research work has been published regularly in premier management journals such as Academy of Management Journal, Academy of Management Review, Organization Science, Strategic Management Journal, Journal of Management, and Journal of International Business Studies, and several of which have won best paper awards. He is Editor of the Journal of International Business Studies. He has served as Associate Editor for the Strategic Management Journal, a leading journal in management, from 2009-2016. He is also on the editorial boards of the Academy of Management Journal, Global Strategy Journal, Journal of Management, and Long Range Planning.


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.