Local Government Support,Ownership And Success Or Failure Of M&A

At present,China is still in the transition period of economic development,and the market economy system is not mature.Local government's support for local M&A activities not only provides local enterprises with information,funds,services and other facilities to improve the success rate of M&A,but also implies the possibility that the government can use administrative intervention to distort the decision-making of M&A to achieve the government's social and official political goals,thus damaging the performance of M&A.In view of the relationship between the local government behavior and the success or failure of enterprise merger and acquisition,the applicability of the systematic theoretical analysis formed by western scholars due to the differences in political systems is questionable.However,due to the use of different samples and different measurement indicators,Chinese scholars have also come to two different conclusions: "support hand" and "plunder hand".Therefore,it is of great value both in theory and in practice to study the influence of local government support on the M&A of Listed Companies in the jurisdiction based on the actual political background of China.This paper takes the implementation of "Phoenix action" plan in Zhejiang Province as a typical representative of the local government to strengthen the support for local enterprises' M&A,takes the M&A initiated by listed enterprises in Zhejiang Province before and after the implementation of "Phoenix action" plan as the research object,and differentiates the M&A initiated by listed enterprises in Zhejiang Province before the implementation of "Phoenix action" plan and the M&A initiated by listed enterprises in Zhejiang Province after the implementation of "Phoenix action" plan The M&A initiated by municipal enterprises is regarded as two sub samples of the study.According to the time sequence,the completion of M&A events,the short-term stock price excess yield of the acquirer and the financial performance change of the acquirer one year after the M&A are used as indicators to measure the success or failure of M&A.logit regression,event research method,OLS regression and principal component analysis are used to measure the two sub samples respectively The sample conducts the empirical research and comparative analysis between the above three indicators to measure the success or failure of M&A and the enterprise ownership nature variables,and draws the following conclusions: first,local government support will make local state-owned enterprises more vulnerable to failure in M&A compared with private enterprises;second,local government support will make local state-owned enterprises more vulnerable to failure compared with private enterprises The deterioration of the average Mid-term Financial Performance after M&A is more obvious.The above conclusions confirm the "plunder" effect of local governments on M&A.In addition,local government support will enable local state-owned enterprises to obtain higher excess return rate of stock price due to M&A announcement compared with private enterprises.Because the fluctuation of stock price more reflects the reaction of investors to M&A than the value objectively brought by M&A to enterprises,the conclusion may be that investors cannot recognize the true value of M&A and are attracted by government publicity and that's what happened.All in all,the negative impact of local government support on the implementation of high-quality M&A of Listed Companies in the jurisdiction is greater than the positive impact,that is,the "hollowing out" role of the government is more obvious.Therefore,this paper argues that only by further regulating the role of local governments in M&A activities,promoting the reform of the management system of local state-owned enterprises and the improvement of the internal governance structure,can local governments effectively prevent excessive interference in the decision-making of enterprise M&A,so as to better enhance the M&A of listed enterprises,especially local state-owned enterprises supported by local governments Achievements.