Motivation of Foreign Partners Sample Clauses

Motivation of Foreign Partners. In this section, we explore the foreign firms’ motivations for allying with SOEs. First of all, we examine foreign firms' likelihood of collaborating with local SOEs. We ask whether the country-level factors could also influence the foreign firm’s selection between local SOE and non-SOE partners. To answer this question, we conduct deal-level analysis and estimate the following regression model: SOE Firmj𝑡 = 𝛽0 + 𝛽1𝑋𝑖j𝑡–1 + 𝛽2𝑍𝑖𝑡–1 + 𝐹𝐸𝑠 + s where SOE Firm is a dummy variable, which equals one if the foreign firm is collaborating with local SOEs, and zero if it is collaborating with local non-SOEs. i represents the country of foreign partner in domicile, j represents the country of the local partner in domicile, and t represents the year of the alliance announcement. 𝑋𝑖j𝑡–1 are the variables of interests, which are the same set of political and economic variables used in the previous section. We control for the foreign firm’s characteristics 𝑍𝑖𝑡–1 including firm size (Ln (total assets ($ U.S))), dividend payment (Zero-dividend dummy), market to book ratio (Market-to-book), return on equity (XXX), leverage (Long-term debt/assets), sales growth (Sales growth), and quick ratio as the proxy for firm liquidity (Liquidity), which have been used by prior researchers (Xxxx and Xxxxxx, 2015; Xxxxxxxx et al., 2016). We use a dummy variable to indicate whether the two partners are from the same industry (Related deal dummy) to the deal-level regressions. We also control for the year fixed effect and the fixed effect from the country of foreign partner. Standard errors are robust and clustered at the level of foreign partner’s country. Table 3 presents the results of probit regression, where Panel A and Panel B show separate results including political, institutional and economic factors, respectively. As for the political and economic variables at the country-level, we find the impact of these factors on the likelihood of collaborating with SOEs for individual firms is consistent with our previous regression results at the country-pair level. For example, the political variables have a negative impact (Polity IV democracy diff and Institutional differences) and the economic variables have a positive impact (Industry dissimilarity, Total reserves as %GDP diff and SOEs domestic alliance activity) on the foreign firm’s likelihood of collaborating with SOEs at 1% significant level. We also observe that higher foreign ownership restrictions in the local...
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Related to Motivation of Foreign Partners

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