Government Intervention, Local Market Environment And M & A' Performance Of Local State-owned Listed Companies

Merger and acquisition as a means of resource sharing, can make the enterprise larger quickly and easily. Recently M&A of listed companies is became a hot issue in our economy. Whereas, there is a complicated background of the M&A activity, for the direct government intervention. This thesis combined the western theoretical and empirical research, analyze the performance of M&A and its influencing factors under government intervention in China. The local market environment as an important factor also is considered. On the background of the Non-tradable Shares Reform and the development of the markets, it will be good or not for the M&A of listed companies. This thesis also research whether the improvement of local market environment can mitigate this negative influence or not.For the fiscal decentralization and the Non-tradable Shares Reform, when there is a M&A of the listed company, the local government have a strong motive to intervene. We select the 2006-2008 local state-owned listed companies that carry out the M&A in China as the empirical research samples, according the ultimate controlling shareholder of M&A companies. This thesis, using the data on ultimate shareholders' ratio and the data on regional institutional environment of China worked out by Fan and Wang (2006), investigates the relationship among government control, local market environment and firm value by using OLS regression.We find that, government intervention has both positive and negative influence on the M&A performance. The larger the ultimate shareholders' ratio is, the better the M&A performance is. When the buyer and the seller are in the same area, the performance of M&A is bad. But the improvement of local market environment can mitigate this negative influence. Besides, the relative size,ownership structure,operating status are important factors to M&A performance.This thesis based on previous theory and research, selected representative variables to carry out empirical research and obtained important conclusions. It may provide a reference value to both policy makers and investors.