Financial Market Segmentation, Credit Discrimination and Cross-regional M&As
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| Title | Financial Market Segmentation, Credit Discrimination and Cross-regional M&As
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| Author | Chen Yizhi and Cai Qingfeng |
| Organization | School of Economics, Xiamen University |
| Email | chenyizhi0829@163.com, qfcai@sina.com |
| Key Words | Financial Resources; Market Segmentation; Credit Discrimination; Cross-Regional M&A |
| Abstract | The market liquidity has been considered as Catalyst in the development of M&A market. Since in our country, the local financial market is rather independent and the credit discrimination problem is unavoidable. Can the distribution of financial resources have an impact on the acquisition decision? This paper developed a choice probability model based on the behavior of a company’s micro-level M&A decisions to anticipate and explain the result of M&A market. Using over fourteen thousand success acquisition events to construct a balanced panel data on province-level, this paper empirically test the model’s prediction. The empirical result indicates that the difference of financial resources in different province has a significant influence on the decision of an acquisition choice. With the Credit Discrimination problem, the Non-SOEs used the way of cross-regional M&A to acquire more financial support, while the SOEs can benefit from the support of local financial institutions to do more cross-regional M&As for arbitrage. This paper concludes that the M&A activities in our country is able to help solve the problem of capital misallocation, and the development of financial market can push the M&A market to become more efficiency. |
| Serial Number | WP1302 |
| Time | 2018-10-26 |
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