Measuring Potential Efficiency From Mergers Among Coal Companies In China

At present,coal is one of the major energy sources in China,accounting for more than 50%of the energy consumption.As the basic energy,the coal plays an important role in economy.Because of economic restructuring,the government continuously reforms the industries that consume a lot of energy,and sticks to cut excessive industrial capacity.At the same time,the development of low-carbon energy will be the only direction of development in the future.So,it is important that the coal industry is to reform.In recent years,Chinese government has been encouraging the merger and reorganization of coal enterprises in different regions and sizes,which will be good for optimizing resources disposition,improving the quality of supply and bringing the scale effect.In the stage of market-oriented merger,the listed companies launch a sea of mergers,in order to improve the efficiency and competitiveness of companies.This paper is based on the data of 24 listed coal companies in 2018.By CCR model and BCC model,we analysis the comprehensive efficiency,pure technical efficiency and scale efficiency of coal companies.Further,according to the returns to scale of coal enterprises,we use the assumption of no-reduction return to scale to calculate the potential efficiency.we use the method of Bogetoft-Wang model to analyz the potential efficiency of merger,decompose the potential efficiency and find out the coal enterprises that urgently need merger and acquisition.The results of efficiency calculation show that 17 coal listed companies are ineffective.And the pure technical efficiency of 13 coal companies is low.It means the technology of these 13 coal companies is invalid.From the perspective of scale efficiency,the scale efficiency of eight super large and large coal companies that have more than 50 billion assets,are all more 0.99.It means that these companies are similar to scale efficiency.By contraries,the scale efficiency of the most medium and small coal companies,with assets less than 50 billion,are low.We also find that the four super large and four coal companies are in the stage of constant returns to scale,and the most small and medium-sized companies both are in stage of increasing returns to scale.So,we believe that mergers of small and medium-sized companies may be more likely to bring scale effect,improve the scale efficiency and comprehensive efficiency.Based on the returns to scale of coal enterprises,the paper uses the assumption of no-reduction return to measure the potential efficiency of coal enterprises' merger.The results show that:firstly,among the four super large companies with assets more than 100 billion,the merger efficiency of Shenhua Coal Industry,Yanzhou Coal Industry and Shanxi Coal Industry is more than 0.97,so the efficiency improvement space brought by merger is less than 3%.And the merger efficiency of China Coal Industry is 0.84,so the efficiency improvement space of China Coal Industry is 16%.It is because of learning effect.The pure potential benefits of the four super large enterprises from harmony effect and scale effect is very low,so they are not suitable for merger.Second,among the four large-scale coal enterprises with assets more than 50 billion,Yitai Coal Industry,Lu'an Coal Industry and Xishan Coal Industry have more than 10%of the efficiency improvement space,but their sources are different.Yitai Coal Industry get the main potential benefits through harmony effect that is direct evidence of the merger.Lu'an Coal Industry and Xishan Coal Industry get the main potential benefits through learning effect,which is not direct evidence of the merger.The efficiency improvement space of Huaibei Coal Industry are very low.In addition,the scale effect of the four large coal companies is not significant.Third,among the small and medium-sized coal enterprises with assets less than 50 billion,the efficiency improvement space of Datong Coal Industry and Lutian Coal Industry is 6%and 8%respectively.And the efficiency improvement space of the other small and medium-sized coal companies are more than 10%.The most potential gains are from learning effect.And some potential benefits are from harmony effect and scale effect.Haohua Coal Industry,Panjiang Coal Industry,Zhengzhou Coal Industry,Jingyuan Coal Industry and Anyuan Coal Industry have significant space to improve merger efficiency.Finally,among the 17 coal enterprises with low comprehensive technical efficiency,Panjiang Coal Industry,Zhengzhou Coal Industry,Jingyuan Coal Industry,Anyuan Coal Industry have significant pure merger efficiency improvement space.So,They have obtained significant scale effect and synergy effect through merger,and are coal enterprises in urgent need of merger.On the basis of the research,this paper gives following comments:first,there are different ways to improve the merger efficiency of coal listed companies.China Coal Industry,Lu'an Coal Industry,Xishan Coal Industry,Pingmei Coal Industry,Yangquan Coal Industry,Jizhong Coal Industry,Xinji Coal Industry,Lanhua Coal Industry,Dayou Coal Industry,Liaoning Coal Industry,Shanghai Coal Industry,Hengyuan Coal Industry and Panjiang Coal Industry have significant learning effect in merger.Therefore,when choosing the target of merger,they should prefer those with high technical efficiency.After the merger,the efficiency of enterprises can be improved by improving management and optimizing production and operation.The harmony effect of Yitai Coal Industry is significant,so it is necessary to pay attention to the integration of resources and optimize the allocation efficiency of resources to obtain the effect of merger.Haohua Coal Industry,Panjiang Coal Industry,Zhengzhou Coal Industry,Jingyuan Coal Industry,Anyuan Coal Industry and Hengyuan Coal Industry have significant learning effect and significant potential benefit of pure merger.Second,the comprehensive technical efficiency of some small and medium-sized coal enterprises is low,and their pure merger benefit is significant.Therefore,the national policy should encourage small and medium-sized coal enterprises to carry out merger.Third,in the analysis of merger efficiency,learning effect is very significant.Therefore,while encouraging the merger of coal enterprises,the country should also encourage the coal enterprises to improve their efficiency.By the incentive policies,the coal enterprises actively improve their efficiency.Fourth,the super large coal enterprises with total assets of more than 100 billion not only have small space for pure merger efficiency improvement,but also make the market power of super large enterprises further increase,and the negative effect may be greater than the merger effect.The government should pay attention to their merger examination.In addition,in order to obtain the effect of merger,the enterprises should pay attention to the risk of merger.