Empirical Reseach On Vertical Integration Of China's Dairy Industry Impact On Enterprise Performance

Although China's dairy industry started late,it developed more quickly and has become the second largest dairy consumption market in the world.However,the dairy industry repeatedly experienced dairy quality and safety crisis,until after 2008,"melamine" incident happened,the importance of milk source base has become increasingly prominent,and dairy enterprises have strengthened upstream milk base control.Since 2009,the dairy industry has been to run its own ranch?cooperative pastures and shares pastures,and has already achieved initial results.At the same time,the government has promulgated a series of measures to increase the dairy industry consolidation,such as "merger integration" policy,merger integration seems to be a trend.However,the vertical integration can increase their market power,and reduce transaction costs,but will increase administrative expenses.Whether vertical integration can really improve the performance of enterprise?Whether the government should be more focused on its reform of dairy industry vertical integration?This paper measures degree of vertical integration of China's dairy industry,and then establishes regression model to test the impact of vertical integration on enterprise performance.This will be of great significance for the development of China's dairy industry in the future and the government to formulate policies.This paper applies literature research to expound systematically theoretical research and empirical research.For theoretical research,this paper mainly reviews vertical integration theory;for empirical research,this paper summarizes research of vertical integration index and the effects of vertical integration of enterprise performance.This paper analyzes the current situation of China's dairy industry vertical integration.This paper focuses on the transaction cost theory,introducing how six aspects to decide transaction costs.Implementing vertical integration can reduce the information asymmetry between upstream and downstream businesses,stable supply of raw materials;to internalize market transactions for enterprise internal behavior can reduce business transaction costs,and ultimately improve business performance.This paper also uses quantitative analysis method to test the impact of vertical integration on enterprise performance.Because of the availability of data,this paper mainly takes listed companies in dairy industry as samples.It uses Value added method amended by Barzel to measure vertical integration index,and notes that vertical integration index increased gradually,and then makes regression analysis for each variable with Eviews.This paper draws the following regression results:(1)There was a positive correlation between vertical integration index of the dairy industry and enterprise performance.But from the value of R2,Goodness of fit is relatively low,we can't simply say vertical integration has impact on enterprise performance,and need to consider other factors.(2)After adding three control variables,the effect of fitting regression equation becomes better.Vertical integration index and enterprise performance remains positive correlation.Regression coefficient also increases.Firm size,total asset turnover ratio and return on assets are positively correlated;asset-liability ratio and return on assets are negatively correlated.The last chapter draws a conclusion,and then puts forward some countermeasures and suggestions to the dairy enterprises and the government.In addition,research on vertical integration of the dairy industry focused on qualitative analysis.Based on the summary of previous theoretical analysis,this paper measures the dairy industry vertical integration index and tests the relationship between the dairy industry vertical integration and enterprise performance.However,because the data collected is less may influence regression results;vertical integration index has three kinds of methods.Because the other two methods of data are not readily available and according to the individual time constraints,this article only chose a calculation method to test the degree of vertical integration of the dairy industry.It has certain limitations.