Marketization level, government intervention and firm M&As: evidence from the local SOEs in China

ABSTRACT

The state-owned enterprises (SOEs) in China are commonly criticized due to their decision-making being intervened by the government. In this article, we present that the marketization level restrains the local government’s intervention in the local SOEs’ mergers and acquisitions (M&As); and the restraining impact is enhanced in the local SOEs, especially on their diversified M&As, when the government possesses stronger power in the firms. The article sheds lights on theories of market segmentation and government intervention in an emerging economy where interventionist governments commonly exist.

KEYWORDS:

• Marketization
• M&As
• government intervention
• local SOEs
• China

JEL CLASSIFICATION:

• G34
• H77

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ It is calculated by ‘1 - local government expenditures/local GDP’, therein local government expenditures include general public budget expenditures and government fund expenditures. They use it to reflect the market allocation of economic resources for a certain province. And in order to avoid yearly impact, they use three-year moving average to measure it.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [Grant numbers 71602010 and 71602085].