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

Under the condition of complete market, M&A is the independent behavior of enterprises. In the context of China’s emerging market in transition, M&A will be affected by government intervention to a certain extent, and then show different characteristics from the complete market in terms of M&A motivation, M&A mode and M&A price, which is mostly represented by the M&A of SOEs (Pan Hongbo, 2008; Fang Junxiong, 2008). However, with the development of China’s marketization process, more and more enterprises are engaged in M&A and other economic activities as independent market entities. On account of this empirical basis, this part aims to further study the respective action path of cost drivers—tax-saving effect and growth drivers—environmental effects of cross-regional M&A, so as to examine the micro-mechanism of cross-regional capital flow, rather than discuss the impact of government intervention on M&A. At the same time, this part does not carry out the comparative study of cross-regional M&A and M&A within a certain region, which is specially discussed in another article.

In terms of sample selection, the data of industrial enterprises above the designated size is the most desirable, but because the corresponding M&A data and enterprise characteristics data cannot be obtained, this section, for data availability, uses M&A data of listed companies. In addition, in the full sample data of non-local mergers and acquisitions, the target companies overseas mainly come from Hong Kong, South Korea, Japan, and the United States. Given that this section mainly studies the tax environment of 30 provinces across the country, such samples are excluded. The proportion of non-local M&A in total M&A cases may be lower than the actual.

The market value of non-tradable equity among them is replaced by net assets.