Research On Government Intervention Political Connections And The Performance Of M&A

It is documented that China takes the second place by the output value ofmanufacturing industry accounting for about16%of the total output value ofmanufacturing industry of the world. However, our country is not a powerfulmanufacturing country in the world. Because we don’t have the core science andtechnology, the high added value of products and low energy consumption. To solvethis problem, our country put forward the emphasis of “the12th Five-Year Plan”which is the economic transition, reaching the optimal allocation of resources andrealizing the revitalization of the industry. Thus, merger and acquisition which is aimportant method to make the enterprises bigger and stronger, reach the optimalallocation of resources and realize the revitalization of the industry is widely used inthe economic activities of domestic and international enterprises. Because of thegovernment and the enterprises are combined, the activities of merger and acquisitionin our country have the native characteristic. Due to the imperfect market system andlaw, the government would properly intervene the marketing activities to make up theshortage of the market. But the government could excessive intervene the economicactivities of the enterprises and plunder the economic resource at the same time whichis bad for the development of the enterprises and the revitalization of the industry. Atthe background of “the12th Five-Year Plan” and industrial revitalization, it makesgood sense to study on the effect of the government intervention on the enterprisesand the whole industry, the role what and how the government play.The essay firstly reviews the research achievements of the relationship of thegovernment intervention the political connection and the performance of the mergerand acquisition at home and abroad. Then on the base of the hypothesis of the rationaleconomic man, agency theory, residual rights of control theory and public interesttheory are described in details. On the basis, the essay built multivariate regressionmodel, selected the data of381manufacturing industry listed companies which haveexperienced merger and acquisition during2007to2009period and use Excel andSPSS17.0to process data. The empirical results manifest that:(1)the performance ofthe merger and acquisition of the state-owned Enterprises and local governmentintervention are weakly correlated; the performance of the merger and acquisition ofthe local state-owned enterprises and local government intervention are significantnegative; the performance of the merger and acquisition of the civilian enterprises and local government intervention are weakly correlated.(2) the performance of themerger and acquisition of the loss local state-owned Enterprises and local governmentintervention are significant positive.(3) the performance of the merger and acquisitionof the valuing local state-owned Enterprises and the political connection are positive.At the end of the essay, based on the theoretical analysis and the conclusions, wegive some suggestions: firstly, make sure the role of the government and solve theproblem of the offside of governments function; secondly, build the scientificallyrational system of the performance evaluation and prevent the local governmentofficials pursuing the political achievements unilaterally; third, carry on theconstruction of legal system and provide the legal regulation to the merger andacquisition;(4)optimize the enterprise system and realize the growth of the number ofthe mergers and acquisitions.