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This book constructs an innovative theoretical analysis framework for corporate consolidation through M&A under the condition of government competition during the transition period. Under the condition of transitional economy, the government is an important agent in economic development. Government behaviors, especially government competitions, are institutional variables that affect enterprise behaviors and corporate consolidation. Based on the perspective of local government competition, starting from the essential problems of China's enterprise M&A during the transition period, and taking “the existence of M&A waves-the occurrence mechanism of M&A under government competition-the process of corporate consolidation under government competition—the macro and micro effects of M&A” as the main line, this book reveals the mechanism and effects of enterprise M&A on the evolution of industrial economic structure and regional economic structure under the paradigm of government competition. At the same time, taking “the motivations for government competition-conducts of government competition-effects of government competition” as the hidden line, the path of government competition and its impact mechanism are investigated. Relevant analysis of government competition is embodied in the logical framework of M&A and corporate consolidation.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction

Abstract
Corporate mergers and acquisitions, or M&A, and corporate consolidation have, for nearly half a century, been one of the areas of greatest concern to economists and policy-makers. At the beginning, scholars of industrial economics made their fundamental explorations on the issues. George Joseph Stigler and Oliver Williamson have been leading scholars exploring the effects of M&A from the aspects of corporate consolidation performance and public welfares. But as the welfare effects of M&A are complicated in theory and non-convergent in conclusion, many empirical studies have been conducted on the effects of M&A performances. And these explorations mostly resort to event studies and accounting information. As for the social effects of M&A, discussions are mostly carried out following diverse M&A models (Barros 1998; Yoshio Kamijo and Yasuhiko Nakamura 2009), M&A types (Julia et al. 1996), and the impacts of M&A policies (Khemani and Shapiro 1993, with remarkable research results achieved. In response to the waves of M&A in China, studies on M&A theory and empirical studies on M&A have flourished, making the field a thriving branch of research. Many scholars, focusing on the aspect of enterprises, study the mechanism and micro effects of corporate consolidation using event studies and accounting information. And from the aspects of M&A and industrial market structure, helpful explorations have been made by Gao Feng et al. (2001), Fan Conglai et al. (2002), Liu Yu (2008), and Wen Haitao (2010).
Fengrong Wang

Chapter 2. Government Competition, M&A, and Corporate Consolidation: A General Analysis

Abstract
The institutional changes in China’s economic transition have endogenously determined the competitions among local governments. As a mode of resource allocation, M&A and corporate consolidation represent the degree of marketization and are subject to administrative barriers and market segmentation brought about by government intervention. In this chapter, we will first review the relevant literature and the development of government competition and establish an index system for the measure of government competitiveness. And, on this basis, a new framework for the analysis of corporate M&A and corporate consolidation from the perspective of government competition will be established.
Fengrong Wang

Chapter 3. M&A Waves in China: A Survey from the Government Behavior Perspective

Abstract
The history of corporate M&A in China is a magnificent and mysterious picture scroll in the country’s economic transformation. This chapter intends to draw an outline of and analyze this phenomenal picture from the perspective of government behaviors. It first gives a general empirical description of the wave of M&A of Chinese enterprises and their macro motivations, and then presents a deconstructive analysis of the typical phenomena that form the waves, privatization of local SOEs, local SOEs establishing connectivity with the central SOEs, the reverse takeovers or RTOs, to explore the mechanism of government conducts and the institutional environment on the creation of the waves.
Fengrong Wang

Chapter 4. The Mechanism of M&A Under the Impact of Local Government Competition: Models and Empirical Studies

Abstract
M&A behavior is essentially a game centered on pricing and M&A strategy. In this chapter, we will first construct a game theoretic model of M&A incorporating government behavior using the cooperative game method based on the Cournot model. We will study the market structure when the market reaches the expectation equilibrium with the model and further constructs an endogenous SOE M&A model incorporating the local government competition to explain the impact mechanism of local government behaviors on local SOE M&A. And, on this basis, an exogenous M&A model under the competition paradigm of local governments is built up, which uses empirical measurement methods to quantitatively identify and test the factors affecting M&A from the perspectives of tax competition, expenditure competition and regulation competition. Our emphasis will be on the influence mechanism of government behaviors on M&A.
Fengrong Wang

Chapter 5. Corporate M&A and Corporate Consolidation Under Government Competition: Regional Specialization and Industrial Agglomeration

Abstract
This chapter deals with the industrial integration effects of M&As under government competition from the perspective of regional economy. First, based on an extended yardstick competition model, a general survey of the relationship between government competition and regional industrial structure is conducted to expound on the impact mechanism of government competition on regional specialization, and next, an analysis of the industrial paths of SOE M&As is made and the manufacturing industry is taken as examples to study the relation between corporate M&As and industrial agglomeration.
Fengrong Wang

Chapter 6. Government Competition and Intra-industry M&A: Studies on Micro and Macro Performances

Abstract
This chapter deals with intra-industry M&A. Starting with the performance measurement methods for M&A, we will include government competition and relevant institutional factors for our studies. Firstly, we take the industry or market structure as an exogenous variable to investigate the performance of M&A and their impact factors under the existing market structure of related industries. This is a static micro performance analysis. Secondly, from the perspective of marketization, we will study the mechanism of the impact of institutional environment on the performance of intra-industry M&A. This is the macro factor consideration for micro performance analysis and the foundation for macro performance analysis. Finally, we will take the industrial agglomeration as an endogenous issue and take the regional industrial concentration as an indicator for macro performance measurement to investigate the impact of M&A on the evolution of industrial market structure under government competition. This is a dynamic macro performance analysis.
Fengrong Wang

Chapter 7. Government Competition and Conglomerate Merger: Performance Extension Studies from the Perspective of Life Cycle Theory

Abstract
In this chapter, we introduce the life cycle theory and analyze the relationship between government intervention and M&A performance from the perspective of enterprise life cycle. We will lay emphasis on the study of the impact mechanism of inter-industry M&A on the optimization and upgrading of industrial structure under the framework of government competition from the perspective of industry life cycle. Empirical analysis will be conducted with the emerging industries of strategic importance as an example. This is the extended studies on the performance of M&A.
Fengrong Wang

Chapter 8. Conclusions, Suggestions and Prospects

Abstract
Corporate M&A and corporate consolidation are the paths for external growth of enterprises and ways of allocation of social and economic stock resources. Past studies on M&A and corporate consolidation are theoretically based on the models of mainstream economics and follow the full market hypothesis. In the aspect of empirical studies, the analysis of M&A effects is mostly limited to the micro level. Most studies on M&A from the perspective of industrial market structure take industry and market structure as exogenous variables to analyze their impact on the behavior and occasion of M&A. Under the condition of transitional economy, the government is an important agent in economic development. Government behaviors, especially government competitions, are institutional variables that affect enterprise behaviors and corporate consolidation. Based on this theory and the empirical facts, we have in this book innovatively constructed a theoretical analysis framework for corporate consolidation through M&A under the condition of government competition during the transition period. Based on the perspective of local government competition, starting from the essential problems of China’s enterprise M&A during the transition period, and taking “the existence of M&A waves—the occurrence mechanism of M&A under government competition—the process of corporate consolidation under government competition—the macro and micro effects of M&A” as the main line, this chapter reveals the mechanism and effects of enterprise M&A on the evolution of industrial economic structure and regional economic structure under the paradigm of government competition. At the same time, taking “the motivations for government competition—conducts of government competition—effects of government competition” as the hidden line, the path of government competition and its impact mechanism are investigated. Relevant analysis of government competition is embodied in the logical framework of M&A and corporate consolidation.
Fengrong Wang

Backmatter

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