Government Intervetion, Industries Characters And The M&A Value Creation

On the mergers and acquisitions, Western scholars’ research literature has beenabundant. But if transplant its theory and method to the mergers and acquisitions inChina, there was an M&A performance paradox. This is because the formation ofmergers and acquisitions in the West is based on market principles, whereas "arbitrarilyarranged" M&A activity which our local governments out of their own performanceconsiderations is often contrary to market principles.Therefore, the impact of government intervention to the M&A which becomes ahot topic of China’s scholars are concerned about the results of their research from thefollowing three aspects: the motives of the government to intervene in M&A, the impactof government intervention to the acquisition targets and M&A strategic choice, theimpact of government intervention to the M&A performance. We note that in the studyof government intervention the impact of M&A, most analyzes focus its attention on thelocal government. This is because the central government and local governments in therole of government intervention is different. Since the decentralization reforms, thecentral government more in corporate governance plays a principal role, while localgovernments take the role of agents.Therefore, if the government-led M&A are often related to local government, whatkind of role does central government play? In fact, the central government, through thedevelopment of industry policies to regulate the negative impact of the intervention oflocal government M&A, the reason is that the central government to develop industrypolicy will affect the local government on the importance of these industries, andindustry competition degree market environment, thus affecting the degree ofintervention or the intervention of local government enterprises of a certain industrymergers and acquisitions.Therefore, this article uses empirical methods to examine the performance of theindustry characteristics set by the central government control barriers will affectmergers and acquisitions? Will government intervention to these industry characteristicswith the M&A performance relationship a regulatory role? The contribution of thisarticle is mainly for the following two points:①Through empirical analysis, asignificant impact to provide supporting evidence for the industry characteristics wouldbe M&A performance;②based on hollowed out and support the theory and empirical test whether the central government can industry policy guidance to regulate thenegative impact of the purposes of local government mergers and acquisitions, whichprovide a useful policy basis for how to improve the negative intervention of the localgovernment on the local state-owned enterprises.Central SASAC in2006for the first time defined the state-owned capital willimplement the strategic control of the industry. Based on the reality that background, thelocal state-owned listed companies in M&A events occurred between the years2007-2009as the sample, the empirical effects of government intervention, industrycharacteristics, and M&A value creation between. This study shows that:①forprofit-making enterprises, M&A value of local government intervention will create theformation of the "grabbing hands"; For loss-making enterprises, the local government’sintervention had no significant impact on M&A value creation.②compared tostate-owned enterprises and strategic industries, M&A value of non-strategicstate-owned enterprises of the industry to create larger. Absolute control of strategicstate-owned enterprises of the industry’s M&A value in a strategic industry, creategreater.③the implementation of M&A activity, the industry characteristics of thelocal state-owned enterprises would be government intervention and M&A valuecreation relationship between a regulatory effect. Specifically, the profit-makingenterprises, industry characteristics for the absolute control of strategic industries andnon-strategic control industry, the negative impact of regulation, the governmentintervention in the M&A value creation, not significant; for the loss-making enterprises,the industry is characterized by absolute control of strategic industries the governmentintervention on M&A value creation is not a significant adjustment for significantnegative impact.