Empirical Analysis in the Political Connection and the Performance of Merger and Acquisition

Abstract

As the domestic capital market starts late, relative to perfect foreign capital markets, there is relatively less study on Merger and Acquisition (M & A), and there is more lacking in related research on the impact of non-economic factors such as corporate culture and political connection on the performance of M & A. This paper supplements vacancy related fields through the study on impact of relations between enterprises and governments on the performance of M & A. Taking M & A events launched by China’s A-share listed companies from 2007 to 2011 as samples, this paper uses operating cash flow return on total assets to measure a company’s performance and testing is performed by multiple regression analysis; the results show that the political connection degree of general manager or chairman has no significant impact on the performance after M & A, while has a significant positive impact on the performance of M & A in private enterprises.