Non-controlling Shareholders’ Participation In Governance And M&A Of State-owned Enterprises In Mixed Ownership Reform

Mixed ownership reform is the key to the reform of state-owned enterprises(SOEs)and plays a strategic role in supporting the state-owned economy,as it enhances the "Five Forces" of the state-owned economy.Ultimately,it is of great strategic importance to achieve high-quality development.Since the Third Plenary Session of the 18th Central Committee of CPC,with the promotion of the "1+N" policy system and a series of reform actions such as the "Double Hundred Actions" and the"Three-year Action",mixed ownership reform has appeared more and more frequently in the top-level design of the reform of SOEs and the state-owned economy.In the report of the 20th CPC National Congress,it is also clearly stated that "we should intensify the reform of state-owned capital and SOEs,accelerate the optimization of the layout and restructuring of the state-owned economy".Current academic research and corporate practice are jointly focusing on a new phase of deepening mixed ownership reform,exploring the basic logic of heterogeneous capital governance,and thus testing the effect of mixed ownership reform in practice and providing empirical evidence for enterprise reform.The essence of the mixed ownership reform is to form a mutual check and balance shareholding structure based on the joint ownership of heterogeneous capital,and then to improve the governance mechanism of the mixed ownership enterprise with the governance effect and resource effect of the diversified capital structure,enhance the core competitiveness of the enterprise and achieve high-quality development of the enterprise.The key to successful mixed ownership reform therefore lies in leveraging the advantages of heterogeneous capital,which in turn leads to an effective governance mechanism for non-controlling shareholders.Existing studies have focused on the impact of noncontrolling shareholders on investment activities such as innovation and total factor productivity of SOEs in the context of mixed ownership reform from two formal institutional governance perspectives,namely equity governance and senior governance.Firstly,existing studies have ignored the governance role of heterogeneous capital based on the effect of informal institutional resources,and have not reflected in their studies the important contribution of elements such as information resources in social networks to play the governance role of non-controlling shareholders.Furthermore,they lack an in-depth exploration of the intrinsic links between formal and informal institutions,and fail to reflect the sources of governance power of non-controlling shareholders comprehensively.Secondly,existing studies focus on the introduction of social capital into SOEs)taking SOEs as the subject of study to explore how the "bring in" strategy can help enterprises build an efficient governance system and alleviate their diversification objectives,but do not pay enough attention to the "go global" strategy of SOEs,failing to clarify the governance mechanism of non-controlling shareholders of Chinese capital in the context of "state-owned capital into non-stateowned enterprises",that is,not paying enough attention to the "two-way mixed reform".Finally,less attention has been paid in existing studies to the impact of mixed ownership reform on M&A of SOEs,which as a systematic and complex strategic investment approach is not only an important path for enterprises to achieve a leap forward,but also an important tool to verify the effectiveness of mixed ownership reform.A small number of current studies have focused on the impact of mixed ownership reforms on the M&A performance and M&A efficiency of SOEs,but there is a lack of coherence based on a M&A process perspective and few systematic studies that combine empirical evidence with case studies.Based on the above analysis,this article focuses on the core theme of non controlling shareholder participation in governance and state-owned enterprise M&A in the context of mixed ownership reform,and follows the classic analysis model of "structure behavior performance" to finish this whole study.This article uses both empirical and case studies as research methods.This study selects all A-share listed state-owned enterprises from 2007 to 2021 as the research sample,constructs the governance participation index of non controlling shareholders’ participation in governance through factor analysis,calculates the long-term and short-term M&A performance of enterprises using the event study method,uses multiple linear regression to verify the impact of non controlling shareholders’ participation in governance on the M&A behavior and performance of state-owned enterprises.This paper uses the three-step method,Sobel test,Bootstrap test in the verification of influence path,uses interactive item test in the verification of influence factors.The instrumental variable method,Heckman two-stage method,propensity score matching method and other methods are used in the robustness test.The seemingly unrelated test is used to verify the difference in the impact of heterogeneous non controlling shareholders on corporate M&A behavior and M&A performance in the two-way mixed ownership reform.The core research contents are as follows:Firstly,this article clarifies the institutional environment and theoretical basis of mixed ownership reform.On the one hand,it reviews the evolutionary process of China’s state-owned economy,non-stateowned economy,and mixed ownership economy,and systematically sorts out the policy documents of mixed ownership reform in the current stage to clarify the institutional environment of mixed ownership reform.On the other hand,it reveals the theoretical basis of mixed ownership reform from both macro and micro perspectives,and then clarifies the impact of mixed ownership reform on the governance structure of enterprises,and clarifies the power basis of heterogeneous non-controlling shareholders based on three levels of equity governance,top-level governance,and network governance.This lays a theoretical foundation for exploring the realization path of state-owned enterprise M&A behavior and synergy effects,and provides theoretical support for exploring merger and acquisition performance.Secondly,this paper focuses on how the governance mechanism of non-controlling shareholders can optimize the M&A behavior of SOEs,and analyses how non-controlling shareholders improve the M&A behavior of SOEs in the context of mixed ownership reform.The results of the study show that,firstly,the governance mechanism of noncontrolling shareholders can effectively improve the governance level of SOEs and thus optimize the M&A behavior of SOEs.Reducing diversified M&A,connected M&A and high premium M&A are the three important influential paths.The comparative study of the governance mechanisms of non-controlling shareholders found that formal institutional arrangements are the basis of their governance and that highlevel governance plays an important role.The comparative study of twoway hybrid scenarios found that the participation of state-owned shareholders in private enterprises increases the frequency and expands the scale of M&As of firms due to the resource effect,and that the degree of influence of non-state-participating shareholders on the M&A behavior of SOEs is stronger than the influence of state-participating shareholders on the M&A behavior of private firms.Thirdly,this paper analyzes how non-controlling shareholders can improve the M&A performance of SOEs in the context of mixed ownership reform by improving both the efficiency of M&A decisionmaking and M&A integration capabilities.As it shows in the study,the governance mechanism of non-controlling shareholders can effectively improve the long-term M&A performance of SOEs,and this governance effect is carried through the whole process of M&A decision to M&A integration.The exploration of the influencing factors found that the good quality of a firm’s internal controls and stable economic policies help non-controlling shareholder governance mechanisms to improve the M&A performance of SOEs.In the comparative study of two-way hybrid reform scenarios,it is found that heterogeneous shareholder participation in governance improved long-term M&A performance to varying degrees.In the case of the introduction of social capital into a SOE,the noncontrolling shareholder mainly functions on the basis of the formal system to improve M&A performance,while in the case of the acquisition of non-SOE shares by the SOE,the non-controlling shareholder mainly functions on the basis of the informal system to improve M&A performance.Research on the impact path of M&A behavior has found that the participation of non controlling shareholders in governance can effectively optimize state-owned enterprise mergers and acquisitions,then improve the performance of state-owned enterprise mergers and acquisitions.Fourthly,based on the theory of M&A synergies,this paper analyzes in depth the specific paths for Sinopharm to achieve M&A synergies in the context of mixed reform,starting from the three aspects of management synergies,financial synergies and operational synergies,and combining the system-based view and resource-based view.The insights revealed are as follows:on the one hand,from the effectiveness of Sinopharm’s mixed ownership reform,it can be seen that the implementation of mixed ownership reform needs to focus on matching the heterogeneous capital with the development needs of the enterprise.The guidance of the overall strategy should be emphasized,and the equity structure of the company should be set flexibly to seek the optimal corporate governance mechanism.In addition,the company needs to pay attention to "from mix to reform,use the mix to promote reform",properly exercise the mandate of shareholders,implement the mandate of the board of directors and motivate the work of senior management.On the other hand,from the perspective of the pathway to achieve M&A synergies,it can be seen that the M&A synergies cannot be achieved without insightful strategic planning by enterprises.Thus,it is necessary for enterprises to be guided by their development needs,select M&A targets that can enhance corporate governance and complement their resource needs,and seek M&A opportunities with a win-win cooperation attitude.In addition,M&A synergies cannot be achieved without the efficient integration of the target company,and an appropriate integration approach can help companies alleviate cultural conflicts and organizational conflicts arising from M&A and reduce the impact of M&A on organizational stability.This article focuses on the background of deepening reform of stateowned enterprises,integrates multidisciplinary theories,and combines the important proposition of non-controlling shareholders participating in governance with mergers and acquisitions,one of the important strategic investment behaviors of state-owned enterprises,achieving certain innovations,mainly reflected in the following three aspects.Firstly,the measurement method for non-controlling shareholders’participation in governance has been optimized.This article constructs a non-controlling shareholder governance participation index from three aspects:equity governance,top management governance,and network governance,and deeply explores the realization mechanism of noncontrolling shareholders’ governance.It realizes the coupling of the governance role of non-controlling shareholders based on "formal institutions " and "informal institutions ",and makes up for the lack of existing research that only examines the governance role of noncontrolling shareholders from formal institutions.The social network included in informal institutions can provide differentiated information resources,which can not only provide heterogeneous market information in the stage of M&A decision-making,but also provide empirical reference for enterprises to resolve conflicts in the stage of M&A integration.It is an important foundation for non-controlling shareholders to play a governance role.Secondly,it expands the research boundary of the economic consequences of non-controlling shareholders participating in governance under the context of mixed ownership reform,expands the application of the "structure-behavior-performance" framework,and systematically explores M&A-related topics using a combination of theoretical research,empirical research,and case analysis.It analyzes the impact mechanism and influencing factors of non-controlling shareholders participating in governance on corporate M&A behavior and M&A performance,and analyzes the positive role of non-controlling shareholders participating in governance in achieving M&A synergy with the example of Sinopharm Group.It enriches the research content of the economic consequences of non-controlling shareholders participating in governance.Thirdly,this article focuses on two-way mixed ownership reform,enriching the research perspective of mixed ownership reform.Different from existing research that mainly focuses on the first type of mixed ownership reform scenario,where state-owned enterprises are the main body to explore the governance effect of non-state shareholders,this article innovatively focuses on the impact of different property rights of non-controlling shareholders on corporate M&A,merger performance,and merger synergy effects in the two scenarios of "state-owned enterprises introducing social capital" and "state-owned capital investing in non-state-owned enterprises",providing theoretical reference and empirical evidence for a comprehensive understanding of mixed ownership reform.The theoretical significance of this article lies in,firstly,it improves the analytical framework for non-controlling shareholders’ participation in governance,reveals the full picture of the governance effect of noncontrolling shareholders based on the perspective of coupling formal and informal institutions,and provides a more scientific measurement method for subsequent research.Secondly,the article uses the "structurebehavior-performance" analytical framework to conduct empirical analysis on M&A and their performance based on large samples,and completes a case study on the theme of M&A synergy,which is a useful supplement to the application scenarios and related topic research of the SCP analysis model.The practical significance lies in,firstly,the article shows the full picture of the governance effect of non-controlling shareholders,helping enterprises to clarify the inherent logic of noncontrolling shareholders’ governance in the reform of mixed ownership,providing empirical evidence and reference for deepening the "layered and classified" mixed ownership reform and two-way mixed ownership reform.Secondly,this article reveals the key factors that affect M&A value creation,prompting enterprises to pay attention to key processes such as efficiency and integration ability of M&A decisions,focus on key links of M&A,and promote enterprises to correctly understand the risks existing in different M&A.