The Impaction Of Local Governments Intervention On Local State-owned Listed Companies' M & A Performance

As the ultimate controller of local state-owned listed company, the local Governments have strong motivation and ability to intervene in the acquisition of such companies, because of Fiscal Decentralization and old Non-tradable Shares System.The Non-tradable Shares Reform as a fundamental change in China's capital market will have a significant impact on M & A market. Nowadays, the Non-tradable Shares Reform had been finished for several years, this article is based on such background to study the intervention on the local state-owned listed companies'M$A performance of local governments.In this paper, empirical event study results showed that local state-owned listed company does not have an"M&A Performance Paradox"and its acquisition practices can increase the shareholders'short-term wealth.This article used OLS regression to test the impaction on local state-owned listed companies'M&A performance of local Governments intervention and the market feature after the Non-tradable Shares Reform. Empirical results indicate that local Governments intervention remains a very important factor affecting the performance of mergers and acquisitions, and it's more complex in such a capital market systems, it is a"supporting hand"and also a"grabbing hand". The empirical results also found that as the Non-tradable Shares Reform finished, the local Governments have reduced the degree of intervention on local stated-owned listed companies'M&A practice indeed. This reflects the market process of our M&A market after the share reform.