Research On The Impact Of Institutional Environment On The Relationship Between Ultimate Controlling Shareholders And M&A Performance Of Cultural Enterprise

Since the 18 th party congress, the central government attaches great importance to the development of cultural industries, and strives to improve the soft power of culture, and accelerates promoting cultural industries become a pillar industry of the national economy.In recent years, the country carried out special funds for cultural industry, and issued some policies, such as "CPC Central Committee on the decision of a number of major issues deepening reform of the cultural system and promoting socialist cultural development and prosperity ". In order to become the backbone of the cultural industry and enhance industrial concentration, the country encourage large state-owned or state-owned holding group of reforms in place and good growth, capital as a link, to carry out mergers and acquisitions of cross-ownership, cross-industry `and cross-regional, and promote cultural enterprises of the conditions being ripe to list and finance, and encourage listed companies become bigger and stronger by through mergers and acquisitions. Under the promotion of favorable policies, during the period of 1998-2014, as a whole, the number of mergers and acquisitions of cultural enterprises is in a rising trend. But the increase of the number of mergers and acquisitions does not represent the improvement of the quality of M & A. In addition, there are ultimate controlling shareholders in cultural enterprises. The separation of the control right and the cash flow right is likely to make ultimate controlling shareholders encroach the interests of minority shareholders through related acquisitions and other means, damaging M&A performance of cultural enterprise. However, in order to better development of cultural industry, the country issues a series of favorable policies and constantly strengthen financial support for cultural enterprises, so that the institutional environment of cultural enterprises is improved. The institutional environment has an impact on ultimate controlling shareholders and M&A performance, so what kind of impact will the institutional environment cause on the relationship between ultimate controlling shareholders and M&A performance of the cultural enterprises? This is the subject of this paper.On the basis of literature review, this paper finds out the deficiency of present research, and point out that analyzing the influence of the institutional environment havingon the relationship between the ultimate controlling shareholders and M&A performance is valuable, which enrich theoretical research in M&A performance of Chinese enterprise and cultural industry mergers and acquisitions. Then, the definitions of the cultural industry and cultural enterprises, the ultimate controlling shareholders, institutional environment, M& a performance are defined. The paper summarizes the five theoretical basis: the information asymmetry, synergistic effect theory, principal agent theory, modern theory of property rights and free cash flow hypothesis. Then, M & A events of A-share listed cultural enterprises during the period of 2007-2012 as an sample, the paper uses factor analysis method to calculate comprehensive performance score(M&A performance) based on 13 selected financial indicators. Next, the article analyzes changes in the overall performance and concretely analyzes the variation of M&A performance from payment,sibling relationships, associated attributes, the subject background.On the basis of previous studies, the paper analyzes the institutional environment how to adjust the relationship between the characteristics of ultimate controlling shareholder and M&A performance of the cultural enterprises from the cash flow right,control layer and the degree of the ownership separation. The conclusion of the paper are as follows:(1) the institutional environment can inhibit the negative correlation between the cash flow right and M&A performance of cultural enterprises. When the proportion of the cash flow right is higher, the ultimate controlling shareholders carry out "predatory dividend" to seek more private interests of control right, which leads to poor performance of mergers and acquisitions.(2) the better the institutional environment, the weaker the positive correlation between the degree of the ownership separation and M&A performance of cultural enterprises. This is due to the particularity of cultural enterprises.Cultural enterprises has special ideology. The product of cultural enterprises have an subtle effect on people’s way of thinking and behavior, which make the government constantly strengthen the regulation of cultural enterprises by influencing the institutional environment, resulting in that the degree of the ownership separation and M&A performance of cultural enterprises are positively correlated.(3) the better the institutional environment, the weaker the positive correlation between control layer and M&A performance of cultural enterprises. When there are more control layer, the improvement ofthe institutional environment can inhibit the behavior of ultimate controlling shareholders to avoid M&A becoming the tool of ultimate controlling shareholders damaging the interests of minority shareholders, which provides conditions for enhancing M&A performance.(4) In M&A year, state-owned property of ultimate controlling shareholders will weaken the influence of the good institutional environment on the positive correlation between the degree of the ownership separation and M&A performance; in one year after M&A, under the different nature of the ultimate controlling shareholders, the difference of the impact of the institutional environment has on the positive correlation between the degree of the ownership separation and M&A performance is not large; in two years after M&A, non state-owned property of ultimate controlling shareholders will weaken the influence of the good institutional environment on the positive correlation between the degree of the ownership separation and M&A performance. Finally, according to the conclusions, this paper put forward to some policy recommendations, such as optimize the institutional environment.