Have the Chinese national oil companies paid too much in overseas asset acquisitions?

• Published in: International review of financial analysis Vol. 92; p. 103074
• Main Author: Mu, Xiaoyi
• Format: Journal Article
• Language: English
• Published: Elsevier Inc 01.03.2024
• Subjects: Asset acquisition; China; Corporate governance; Exceptionalism; National oil companies; Outward direct investment; Reserve valuation; Reserve valuation; F52; Corporate governance; Outward direct investment; China; National oil companies; Exceptionalism; G34; Q40; Asset acquisition
• ISSN: 1057-5219; 1873-8079
• DOI: 10.1016/j.irfa.2024.103074

This paper provides both a quantitative and qualitative analysis of whether the Chinese national oil companies have “overpaid” than their international counterparts in overseas asset acquisitions during 2001–2017. Using a hedonic pricing framework, we find that while the Chinese companies did not pay more than international oil companies for the period of 2001–2008, there is statistically significant evidence that they overpaid during the 2009–2016 period. A counterfactual analysis was conducted to quantify the extent of the overpayment. Interviews and qualitative analysis suggest that the overpayment mainly results from a rush to gain projects in a period of high oil prices and easier bank loans after the global financial crisis rather than concerns about energy security or other political considerations. •Examines whether the Chinese national oil companies overpaid in overseas asset acquisitions.•No statistical evidence that they overpaid during 2001–2008.•But they did overpay during the period of 2009–2016.•A qualitative analysis was conducted to identify the reasons for the overpayment.•The overpayment resulted from a rush to gain projects in a period of high oil prices.