Government Control, Institutional Environments And Valuer Choice

Asset valuation plays an important role in the state-owned asset management,corporate M&A business.With the introduction of a series of major reforms in thecountry,such as China’s state-owned enterprise reform, the establishment of multi-levelcapital market and financial system reform, asset valuation have a strong vitality.Butthere are also some problems:Because of the birth of a unique asset evaluation industrybackground, asset evaluation industry have a natural association with government.Sothe current assessment of the market is a non-fully competitive market undergovernment control.It is noteworthy that valuer choice is controlled by the governmentand institutional environment two factors influence.Under the special regime of assessment industry, based on two perspectives ofinstitutional environment and the government control to investigate the mechanism ofvaluer choice, mainly studied the following questions:(1) Assessment of the marketwhich is controlled by government has what impact with the listed companies valuerchoice? Whether a political association of listed companies are also more likely tochoose a political association assessment agencies?(2)The companies have differentownership properties, whether have a difference valuer choice?(3)How the institutionalenvironment affects the relationship between government control and valuer choicewhen other factors constant?Of the research methods, firstly the paper finds the significance of the research through sorting out, summarizing and analysing the previous research literatures.describesthe natural association between the asset valuation with government,the mechanism ofGovernment control to valuer choice.On empirical methods, we use the probitmodel,examine the government Control on appraiser selected through multipleregression.The study found that companies controlled by the central government ismore inclined to choose the assessment agencies which have the background of thecentral government;Local government-controlled companies are more inclined tochoose the assessment agencies which have the background of local government.Furtherstudy showed that after the introduction of the institutional environment,institutionalenvironment, the better(the higher the level of market,the lower the index ofgovernment intervention,the higher the level of the rule of law),Companies are more likely to choose non-political association of assessment agencies.That is a goodinstitutional environment have a significant negative correlation with Companies selectassessment agencies have political background.Combined with the nature ofstate-owned property found this negative correlation would undermined by state-ownedproperty.By sub-sample test found,the impact of the system environment to the valuerselection of the state-owned enterprises, is affected by the hierarchical nature ofstate-owned equity of ultimate controller. Compared with the companies which arecontrolled by central government, companies controlled by local government are moresusceptible to be influenced by the institutional environment.