Political Connection, Marketization Degree And Performance Of Mergers And Acquisitions

Enterprise always get expansion through internal and external resources to achieve economies of scale. Mergers and acquisitions is an important way to get expansion. Mergers and acquisitions has developed quite mature in western countries, and there are many theory studies in this area. Because capital market in our country started late, there are many differences in business behavior and institutional environment between our country and foreign country. On the other hand, China is a country that regard “renqing” as important, there are also many differences in culture between these countries. The complicated relationship between enterprise and government affect financing behavior and operating performance of enterprises.This article based on 2007-2014 A-share listed companies as samples, and using AHP analysis method to build A multi-level hierarchical network intensification to get coefficient of political connection. On the other hand, we used marketization index that made by Fan(2009) to study the degree of marketization. We also used cumulative abnormal return(CAR) to measure the performance of mergers and acquisitions. We used multiple linear equation to get empirical test. The research results show that has political connection or not have a negative influence on enterprise M&A performance. The degree of political connection has no significant effect on M&A performance. The marketization of credit capital allocation has a positive effect on M&A performance, while the other three marketization index had no significant effect on M&A performance, which means that the allocation efficiency of credit funds is the major factor in marketization index to influence M&A performance. The improvement of marketization degree has no obvious effect on M&A performance of political-connected firms.