A Study On The Relationship Between Political Connection,Institutional Environment And M&A Performance Of Chinese Firms

In recent years,China’s M&A market has been in full swing.More and more private enterprises choose M&A in order to expand their scale and achieve leapfrog development.However,China is in the period of economic transformation,and the government still has the right to allocate a large number of core resources,preferring state-owned enterprises in the process of resource allocation.However,the private economy,which plays an increasingly important role in the market,still faces difficulties in financing and market access restrictions in the process of M&A.In this context,the private economy will take the initiative to seek political connections with the government,hoping to help enterprises and provide necessary information and resources for their MERGER and acquisition activities.It is true that political connection can help private enterprises in China to complete M&A transactions more easily,but it is worth exploring how the impact of M&A performance after M&A is better.At present,there is no consensus on this issue in academic circles.Therefore,this dissertation attempts to explore the relationship between political connection and M&A performance of private enterprises in China.At the same time,any explanatory merger and acquisition theory is inseparable from the investigation of the institutional environment in which enterprises are located.A good institutional environment can complement formal mechanisms and reduce the dependence of enterprises on political connections for development.Therefore,this dissertation also introduces institutional environment as a moderating variable on the basis of the above research,and further analyzes the relationship among political relevance,institutional environment and M&A performance.The structure of this dissertation is arranged as follows: The dissertation first sorts out the related concepts of political relations,institutional environment and M&A performance,then reviews and comments on the relationship between the three Hypothesis theory,Taking Chinese 2010-2020 Shanghai and Shenzhen A-share listed private enterprises’ mergers and acquisitions as samples,this dissertation conducts an empirical test on the relationship between political connections,institutional environment and mergers and acquisitions performance.First,Incident analysis method is used to measure the performance of M & A in private enterprises.and the dummy variable method and the assigned score method are used to measure whether the enterprise has political connection and the strength of political connection,and then conduct regression analysis on whether there is political connection and the strength of political connection and M&A performance,and then introduce the institutional environment as a moderating variable on this basis,and then regress to analyze whether the institutional environment has an impact on the relationship between the two and how.Further,the sample of private enterprises is subdivided according to the different privatization methods.Finally,the robustness of the regression results is tested by fixed effect test,PSM test and instrumental variable test.The empirical research in this dissertation concludes that the political association of private enterprises has a significant negative impact on their M & A performance,and the stronger the political association is.the worse the M&A performance;compared with areas with poor institutional environment,the better the institutional environment,the more significant The influence of political connection is weakened;the M&A performance of directly listed private enterprises is significantly negatively correlated with political connection,but the sample of private enterprises that are listed directly is not significant.To sum up,the research conclusions of this dissertation enrich the research system of M&A performance,and at the same time help private enterprises in my country to have a clearer understanding of political connections,which is of great significance for promoting regional economic construction and assisting the long-term development of enterprises.