Political Connection,Competitive Position And Merger Strategy

With the continuous development of the market,the M&A activities in China's capital market is keeping going.However,M&A is also a great risk to achieve rapid expansion and resource allocation.Therefore,according to the actual situation in our country to study M&A is of great significance in promoting the development of M&A in China.From the perspective of China's institutional environment,this paper firstly analyzes the influence of political connection and market position on different M&A strategies from the perspective of theory.We think that the enterprise should choose different acquisition strategies for improving its market position,and the political background of the enterprise will also lead to the difference of M&A strategies.Market power motives being achieved determines long term performance of M&A.And political connections in different M&A events make different effect on the promotion of market position,so the role of political connection in different MA&strategy will produce different effects.After the theoretical analysis,this paper uses empirical data to prove the above hypothesis.This paper takes 522 cases of M&A events of listing corporation which happen in 2007-2011 as sample.The empirical analysis is divided into three parts.First,this paper uses the binary logistic model to verify that the industry market status will influence M&A strategies.The higher market status is,the more probability of related M&A will be,and if the situation is on the contrary,enterprises will choose diversified M&A.Second,this paper proves the relationship between political connection,market position and the performance of different M&A strategies by using the intermediary effect inspection process,and the M&A performance is measured by BHAR.The result shows that:in diversified M&A events,political connections promote long term performance of M&A by promoting market position.But in related M&A,political connections have no contact with the promotion of market position.In this situation,political connections will weaken the long term performance of M&A directly.Finally,based on the above theory,this paper puts forward suggestions on the choice of M&A strategies.The M&A strategies should be based on the background of enterprises.By comparing the long term performance of diversified M&A and related M&A,the result shows that:for the enterprises with competitive disadvantage but high political connection,diversified M&A is a suitable choice;for the enterprise with competitive disadvantage and less political resources,related M&A will be better;corporate with competitive advantage and high political connection can choose the both two strategies;the related enterprise with competitive advantage and lack in political connections should choose related M&A.