An Empirical Study Of Reorganization And Performance On Listed Companies’ Shell Resources

On economic transformation, local government intervention plays an important role in the process of shell resources recombinant. As the development of China’s market economy, the shell resources reorganization of listed companies has become an important way to open the door to the capital markets for non-listed company. The current academic research on shell resources issues has focused on aspects of valuation and reorganization performance, little attention to the effect of government intervention on reorganization type and performance.This article aims to explore the impact of government intervention by adding the government factors to the framework of shell resources reorganization actions. According to the nature of actual controller of shell resources, the article divides the sample into state-owned enterprises and non-state-owned enterprises, and further investigates the selective differences between their types of reorganization under the local government intervention, and comparatively analyzes the performance of local and remote reorganization to reveal the effect of local government intervention, and finally concludes with policy recommendations.During the process of shell resources reorganization, local government intervention is mainly reflected in the direct intervention and local protection. As the owner of state assets, the government can directly intervene in state-owned shell resources, and then affect their reorganization behavior and performance; Meanwhile, as macroeconomic manager, the government can not directly intervene in the economic behavior of non-state shell resources, but local protectionism which produced in government competition still have an important impact on the restructuring. Thus, in the process of combing the literature, this paper focuses on the research of government intervention in corporate mergers and acquisitions, and combines the status quo of China’s shell resources reorganization, summarizes motivation of shell resources reorganization.Based on the above theoretical analysis, this paper selects the shell resources recombination events as samples, which occurred in the Shanghai and Shenzhen A-share market between2006and2010, and tests the impact of government intervention on shell resources reorganization behavior and performance. The study found that the level of local government intervention and local protection significantly affect the selection of reorganization type, and there is a significant difference between the performances of different types of reorganization. Specifically, the probability of the occurrence of state-owned shell resources’local recombination is positively correlated with the extent of the local government direct intervention and protection. The probability of the occurrence of non-state-owned shell resources’ local recombination is negatively correlated with the level of local protection, and not significantly correlated with the local government direct intervention; Moreover, the performance of local reorganization of state-owned shell resources is better than the remote ones, and the performance of remote reorganization of non-state-owned shell resources is superior to local restructuring. Thus, local government plays "helping hand" in the state-owned shell resources’local reorganization, while the market segmentation resulted from local protectionism makes local government play "grabbing hand" in the non-state-owned shell resources’ local reorganization.Results of this study show that in order to improve its competitive strength, the local government may intervene in the economic behavior of enterprises through administrative monopoly. This behavior supports local state-owned enterprise to obtain quality resources, but hinders the healthy development of non-state-owned enterprises, which distorts the allocation efficiency of resources.