The Research Of The Local Government’s Influence On Listed Companies’ M&A

Chinese listed companies’ M&As are government-led. With the securities market’s developing process, people pay more attention to the actions of local government in the listed companies’ M&A. As far as we know, local government impacts on the listed companies’ M&A as a shareholder or a supervisor in the process of participation and supervision. The government’s behavior results in both positive and negative effects. The positive effects are the competed advantage of the listed companies in the external market by the government’s support, and the good benefit from the successful M&A that could bring to the government. The positive effects make the government effect the listed companies’M&A actively. The negative effects are functions without a clear line between the government and the market, or the enterprises and the excessive intervention etc when the local government implements its economic function for benefits, which bring an adverse consequence to the government, the stock market and firms.Bases on the theory of the government regulation and M&A in the research, This paper uses the gambling method, time series method and multiple regression method to do the empirical analysis about the influence of the local government in the listed companies’ M&A’s modes, the information disclosure, and the performance. This paper proposes some improvement recommendations in order to reducing the negative influence, which taken by the local government’s behavior in choosing the M&A modes, information disclosure and the short-term performance of the listed companies. In the end, the paper promotes the local government implementing its economic function properly.From the development of M&A under local government influence, this paper positions the status and role of local government in M&A, analyzes the deviation reason of the local government’s affected behavior in the listed companies’M&A and its influence forms. Base on the above research, this paper analyzes the correlation effects of the government, stock market and the listed companies under the influence of the local government in the listed companies’ M&A.In order to study the influence of the local government in M&A modes, this paper chooses a number of116M&A cases, which from2001to2012about the19listed companies in Kunming as a sample, and analyzes the influence proportion of Kunming government in M&A cases, which using the time series method, to establish a error correction model between the first-order differential data of the local government performance indicators and the horizontal, vertical and mixed M&A modes. The local government impels the listed companies under the horizontal M&A mode, in order to increase the urban local government budget expenditure and saving deposit balance of the urban and rural residents at the end of the year (downtown). The local government impels the listed companies under the vertical M&A mode, in order to increase the urban local government budget revenue, the urban average number of employment staffs and urban retail sales of social consumer goods. The local government impels the listed companies under the mixed M&A mode, in order to increase the urban unit employees. Base on above results, this paper gives suggestions to reduce the government’s negative influence in the model of M&A. These are reducing local government’s influence, developing the employment system and improving the government budget expenditure status.In order to study the influence of the local government in M&A information disclosure, this paper uses static gambling model, which under the asymmetric information, to research the gambling behaviors by the local government, the listed companies and the upper regulatory commission. In the general regulation behavior of local government, this paper analyzes that the higher spillover benefits of the listed companies’illegal information disclosure, the high regulation cost of local government, and the lower punishment of the listed companies’illegal information disclosure brings out repeated violations of information disclosure of listed companies. Then this paper analyzes the factors of the illegal information disclosure in conspiracy between the local government and the listed companies for the reason of benefits. The factors are the payable tax rate of listed companies, the spillover benefits of the listed companies’illegal information disclosure without higher commission regulation (or less regulation), the rent income of Government agencies or officials, the punishment of the local government and listed companies’illegal information disclosure, and the higher commission regulatory costs. Base on above results, this paper chooses "GF Securities backdoor Yanbian Road Case" and "Zhongshan Public Utilities Case" to use the model results, and gives suggestions to reduce the local government’s improper influence in the information disclosure of listed companies under the role of shareholder or supervisor.Base on the analysis of the local government’s influence in M&A modes and the information disclosure of listed companies, this paper uses the multiple regression model to analyze how the local government, M&A modes and the information disclosure impact the short-term performance of the listed companies. This paper establishes the multiple regression model, which between CAR of35trading days before and after the M&A and the local government’s indicators, horizontal, vertical and mixed M&A modes, information disclosure desperately, to analyze how the local government, M&A modes and the information disclosure impact the short-term performance of the listed companies.The way of increasing the economic resources distribution’s market share, reducing the local protectionism and government intervention in firms, which could enhance the short-term performance of the listed companies’M&A. One reason for the listed companies’illegal information disclosure is the improving function of illegal information that makes a short-term performance of the listed companies, which before the illegal case exposed. Under the horizontal, vertical and mixed M&A mode, the best short-term performance of the listed company’s M&A is implemented by the mixed M&A mode, followed by the horizontal M&A mode, and the vertical M&A mode is the last. Base on the above results, this paper gives suggestions to increasing the market share of economic resources distribution, reducing local protectionism and the government intervention in firms.