An Investigation On Relationship Between Institutional Environment And M&A Size Based On A Perspective From Investor Protect

Institutional environment for the market economy as the main business is very important. The institutional environment affects the level of investor protection and thus may affect the motivation of market participants so as to enable them to make a different decision-making acts, and these acts will produce different acts of corporate finance and accounting. M&A is the main form of external expansion, is the main financial behavior, and there must be a correlation in the economic sense with institutional environment. This paper draws on research methods that foreign scholars carry out cross-country comparisons to study the institutional environment and cross-border M&A, in a special institutional background for transfer economy in China to study correlation between institutional environment in various regions and M&A size. The paper depicts the institutional environment by taking marketability advancement index in Chinese various areas which establishes by Fan Gang and Wang Xiaolu, selects the overall marketability advancement, three indicators in the marketability advancement index and seven sub-indicators as the substitution variables for environment , has conducted the empirical study through the model building to merger and acquisition activity in the Chinese various areas from 2004 to 2008, and inspects the institutional environment difference influencing various local merger and acquisition scale to draw the following conclusions: in general, the higher the level of market-oriented areas and investor protection are , the smaller the volume of M&A transactions is; the higher the degree of market allocation of resources of the region is, the smaller the volume of M&A transactions is, and market allocation of resources in the region is less, so the Government actively promote mergers and acquisitions; the degree of elements market development does not significantly influence trading volume for enterprise M&A; the volume of M&A transactions is less in the region where the development of market intermediary organizations and the legal system level are high. We can see from the conclusions: in the Chinese special institutional background, part of the mergers and acquisitions business is not in the pursuit of synergies, but only managers and controlling shareholders to obtain control right as a tool; the government-led mergers and acquisitions deprive to some extent the right to decide their own businesses, which may affect the post-merger synergies generated. Therefore, for the emendation of mergers and acquisitions, the Central Government which securities market regulators need , the local government as the majority owners of listed companies as well as the governance structure arrangements need to strive and improve.