Research On The Impact Of Regional Economic Factors On Corporate M&A Decisions

Firm’s M&A decision are seminal trading decisions.Now and then the emer-gence of M&A wave is a reality theme for research.Under the finance government,which is becoming more and more open,Our country’s recent development requires better control without prejudice to market law.And the M&A decision is not only about the finance market,but also related to the success or failure of industrial pol-icy or competition policy in a country or a region.Therefore,it is theoretically and effectively important to analysis the regional economic factors of M&A decisions and understand how the regional economic factors affect M&A decisions.Previous literatures concentrate attention on more micro level to analysis the intensive margin and ignore the extensive margin.Though the micro purpose of individual firm’s M&A decision is worth being analysist,an analysis of the macro global firms’ M&A decisions’ factors may be another point of views,and can prevent the overgeneralization.Thus we can get a certain ability to guide the policy.We start the research in the view of regional factors.We cannot ignore the distance importance in the macro research.Therefore we can research the transport cost to find the path of how other factors can affect the firms’ M&A.Based on the math model,we have found that there are three main factors that can affects the extensive margin of the M&A decisions:transport cost,fixed cost and the market size.They can affect the decisions directly or indirectly.But the direct effect and indirect effect could cancel each other.By using mathematical model to get as many economic conclusions as possi-ble,we can identify some of these conclusions from data.We found that regional economic factors’ effect on aggregate firms’ M&A is consistent with common sense.The reciprocal of transport cost-i.e.trade freedom degree in a place-is increased with extensive margin of aggregate M&A decisions.But we found it is more com-plicated when dividing into the region where acquired firm is and where target firm is.And the empirical analysis proved it.Empirical evidence suggested that there is not significant result about the transport cost of the region where acquired firm is because of unmeasurable.And the effort from the transport cost of the region of target firm to firms’ M&A deci-sions is opposite to the aggregate M&A decisions.That proved the indirect effect of transport cost is so strong that it exceeds the direct effect of transport cost.