Harbin Electric HRBN.O said a research report that pulled its shares down by more than 50 percent on Thursday, was factually incorrect.
A Citron Research report had raised concerns about a $750 million go-private offer by Harbin CEO Tianfu Yang.
The CEO and the company reserve the right to bring legal actions against Citron Research for these erroneous allegations, Harbin said in a statement.
Harbin could not be immediately reached for comment.
Harbin's shares were up 17 percent in pre-market trade on Friday. They closed at $6.9 on Thursday on Nasdaq.
(Reporting by Divya Sharma in Bangalore; Editing by Don Sebastian)