Executive Connections, Government Interventions And M&A Performance

In recent years, our capital market has witnessed a boom of M&A events as a result of reform of state-owned enterprises and industrial integration. By merging, the government could change industrial ecology, adjust the overcapacity and optimize the structure of macro economy. Meanwhile, enterprises could integrate elements that include talents, resources, experience and so on to make leap-type development. From this view, M&A is important to macro economy and business operation. M&A will be the most active financial instrument on capital market in a few years. Researching on M&A in domestic market is significant to offering academic supports to economic development as well as theoretical evidence to specific features about M&A.Based on M&A samples between listed companies occurred from 2010 to Nov.2015, this thesis has done research in the view of executive characteristics, in which this thesis wanted to discuss the effects that executive connections and government interventions may have done to M&A performance. This thesis used average connection index of executives and governmental background of executives to describe the extent about executives connection and the extent about how government intervenes M&A performance. Meanwhile, this thesis created an interactive variable mrough which unifies executives connection and government intervention to discuss how executive connection and government intervention affect M&A performance, in which this thesis tried to enrich research achievements in the area of executive characteristics. Besides, this thesis divided samples into different groups by two characteristics to discuss how executive connection and government intervention affect M&A performance in different dimensions.According to empirical results, executive connection between target and acquisitive companies had clearly positive influences on short-term or long-term M&A performance, from which we could conclude that the more executives know about target and acquisitive companies, the better M&A performance will be. Government intervention made negative influences on M&A performance, and government intervention might impair positive influences that executive connection had done to M&A performance. Compared to long-term performance, government intervention had made clearer influences on short-term performance. According to empirical results by dividing samples into different groups, state-owned enterprises are more likely affected by government than private enterprises, in which government intervention usually made evidently negative influences on M&A performance. This thesis argues that reform of state-owned enterprises should be accelerated to make enterprises operate in a more modernized way.