Does the pricing of intra-group investment deviate from the market rule? Evidence from domestic merger and acquisition transactions under common control in China

Riguang Wen, Siyi Wang and Yingting Ouyang

International Review of Financial Analysis, 2024, vol. 91, issue C

Abstract: This study examines whether the pricing of intra-group investment deviates from market rules using data on domestic merger and acquisition (M&A) transactions under common control in China. It was found that M&A transactions under common control involve a lower premium than those without common control, which rely on market rules to set a price. This is because acquirers in M&A transactions under common control face a lower degree of information asymmetry than those in M&A transactions without common control. Moreover, this study explores the economic consequences of internal investment behavior from multiple angles. It was found that compared with acquirers in M&A transactions without common control, acquirers in M&A transactions under common control have lower performance in the market, finance, and innovation. This study addresses the research gap on the internal investments of groups and deepens our understanding of investment pricing in internal capital markets.

Keywords: Common control; Internal capital market; Intra-group investment; Investment pricing; Merger and acquisition transactions (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1057521923004556
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:91:y:2024:i:c:s1057521923004556

DOI: 10.1016/j.irfa.2023.102939

Access Statistics for this article

International Review of Financial Analysis is currently edited by B.M. Lucey

More articles in International Review of Financial Analysis from Elsevier
Bibliographic data for series maintained by Catherine Liu ().