A Study On The Influence Of Political Connections On The Performance Of Mergers And Acquisitions Of Private Listed Companies

With the rapid development of market economy,enterprises not only need to improve their internal management and resource integration but also to improve their competitiveness through effective external expansion.In recent years,M & A events occur frequently in China and the number and amount of M & A transactions are increasing with years.With the deepening of market economy reform and the maturity of investors,M&A has become an important way for enterprises to develop and achieve strategic objectives.It is also an important means for enterprises to highlight their competitive advantages and diversify their operations.The background of China's system is very complicated,the regional economic development is unbalanced,the legal system needs to be improved,the awareness of property right protection is poor and the local government has strong interference in economic decision-making.Although the development of non-state-owned economy plays a more and more important role in the market,private enterprises still face a lot of policies discrimination and unfair treatment in social activities.Therefore,private enterprises in the process of mergers and acquisitions in order to shorten the process of mergers and acquisitions,mergers and acquisitions to reduce costs,to get rid of financing related problems such as too many constraints in order to actively seek and establish political connection,it is hoped that the government relationship will help enterprises to remove the obstacles of merger and acquisition and provide necessary information and resources for enterprises to carry out M&A activities.At present,the research on political connection and corporate performance or value is relatively rich but from the perspective of political relevance,the investigation of its influence on private enterprise M&A performance study is less.In order to enrich the research in this field,this paper mainly discusses the following issues: whether there is political connection,degree of political connection,type of political connection,industry of political connection,economic zones of political connection and the influence on the M&A performance of private listed companies.In order to help private listed companies to formulate political strategies suitable for their own development but also for the government to improve the legal system,maintain the market environment,promote the development of non-national economy to provide a realistic basis.First of all,based on the background and significance of the research,this paper discusses the connotation,measurement method,motivation,economic consequences of political connection,connotation of M&A and the effect of M&A performance of domestic and foreign scholars.The relationship between political connection and M&A performance of the three main lines of literature combing,summed up the existing academic lack of research and domestic and foreign research conclusions are different reasons.Secondly,the concept of political connection,private enterprises and mergers and acquisitions involved in this study are redefined analysis of the political connection and relevant theories of M&A,thus put forward in this paper,the research hypothesis,construct a general theoretical model.Thirdly,in order to test whether the proposed hypothesis is true or not,this paper selects 159 private listed companies that took place in Shanghai and Shenzhen Stock Exchange in 2012 as the research object.Factor analysis method is used to calculate the performance of M&A in the year of merger and acquisition and four years after merger and acquisition.The sample data are counted by descriptive analysis method and the index model of degree of political relevance is constructed by analytic hierarchy process(AHP).This paper analyzes the relationship between political connection and M&A performance of private listed companies by using multiple linear regression method and the hypothesis model is tested one by one and the following conclusions are drawn:(1)Political connection has positive effect on M&A performance of private listed companies.(2)The closer the degree of political connection,the better the M&A performance.(3)Both central and local political connection will have a positive impact on the M&A performance of private listed companies,but the local political connection will have more influence on the M&A performance.(4)The positive effect of the political connection of manufacturing industry on M&A enterprises is higher than that of the real estate industry and other industries.The political connection of the real estate industry has the weakest positive effect on the M&A enterprises.(5)The political connection will bring positive effect to M&A performance no matter in any economic region.However,compared with the non-economic developed regions,the political connections of enterprises in developed regions has more influence on corporate M&A performance,which is contrary to the research of most scholars in China.Finally,through the analysis of the results of the study,the author puts forward management suggestions on the construction of political relations from both the enterprise and the government.From the enterprise level,the private enterprises should set up the correct values when facing the political connection and combine the enterprise's own development condition and the competitive requirement,do not blindly attach to the government,rational view of the political connection.Private enterprises should know clearly before making decisions on mergers and acquisitions own future development strategy,to know their internal and external environment,planning your resources integration after M&A work,choose the right acquisition targets,the types of M&A and the mode of payment so as to improve the efficiency of M&A.From the government perspective,the government should constantly perfect the relevant legal system,strengthen the construction of social supervision and supervision by public opinion,weakened the government's intervention behavior,to narrow the gap in the degree of regional marketization,for private enterprises to build a freedom,equality,justice,external investment environment in order to promote the orderly development of national economy.