Chinese Enterprise's Merger & Acquisition And The Orientation Of Government's Function

Merger and acquisition (M&A), as the most fierce way of enterprise competition, has been always focused on for long time in capital market. With the fast developing global economics integration trend, developed countries have promoted the 5th worldwide M&A. since 1990's. Meanwhile, the domestic enterprises have started their M&A activities on a large scale along with the gobal M&A. Nowadays, M&A has become one of the most important methods for Chinese enterprises' expanding, developing and to participating in the competition in the international markets.Whereas, the Chinese's enterprises' M&A with government's participating is very different from those in developed countries because of the feature of China's transitional economy. The subject of Chinese government function's rational position is interesting and challenging. It is extremely meaningful to research into this subject for orienting Chinese companies' M&A in future. Meanwhile, we can not directly make use of western theories of M&A in China, which requires the research based on this subject must be creative.This paper starts from western traditional M&A theories, combining with Chinese systems and introducing the jumped-up government governance theory, has constituted a theory framework to analyze Chinese government function's rational position in M&A.First, we summarize western M&A theories as a starting point of my study, that is economic basis, basic theories and common theories. Chinese government's behaviour in M&A comes into being graudally during our economy system's transition, which has its own historical background and institutional reason. We can not go further without acquainting this. Therefore, we compare the enterprises' M&A history in China and western countries, and analyze the cause of property right system, corporate governance structure and market system in order to logically explain Chinese government behaviour in M&A.After that, a question is what consequence the government behaviour leads to? Some normal research has given answers to this problem, but those have no empirical data to surport. We collect 1189 M&A observations in Chinese capital market from 1996 to 2003. The results indicate that government behaviour leads to low efficiency, no matter the analysis from short-term abnormal return, long-term...