After the outbreak of the global financial crisis in 2008,the continuous expansion of local government debt has attracted high attention,and its impact on enterprises has become an important research field.At the same time,the motivation and influencing factors of enterprise merger and acquisition(M&A),an important investment decision of enterprises,have become a research hotspot in recent years.In terms of the transitional economies represented by China,the M&A decision of enterprises is not entirely based on their development requirements,but is usually subject to the macro external environment.Previous research has confirmed that local governments have an important impact on enterprise M&A activities.Therefore,it is of great significance to investigate the impact of local government borrowing on the M&A decision of enterprises in a region and its mechanism.Based on this,this paper empirically examines the impact of local governments'debt expansion on enterprise M&A by using the data of Shanghai and Shenzhen A-share listed non-financial companies from 2008 to 2019 and the manually collected local government debt data at the provincial level as samples.This paper finds that the expansion of local government debt significantly inhibits enterprise M&A,which is reflected in reducing the M&A probability,frequency and scale.Mechanism analysis reveals that local government debt inhibits enterprise M&A by increasing corporate financing constraints,and reducing enterprise risk-taking and corporate investment opportunities.In particular,when an enterprise is non-state-owned,with greater financing demand,lower risk preference of the executives,or in industries unrelated to municipal fields,the impact of local government debt on enterprise M&A will be more significant.Further analysis shows that the expansion of local government debt reduces the M&A performance of enterprises,and reduces the cross-industry M&A and cross-location M&A of enterprises.Compared with existing research,the marginal contributions of this paper are mainly reflected in the following aspects.Firstly,based on the institutional background of China,this paper uses the hand-collected full-caliber provincial-level government debt data to clarify the impact of local government debt on corporate M&A,which is helpful to deepen the cognition of the impact of local government debt on corporate M&A.Secondly,based on theoretical analyses and multiple empirical tests,this paper provides evidence of the causal relationship for the impact of local government debt expansion on corporate M&A decisions,which is helpful to understand the economic consequences of local government debt and the necessity of governing local government debt.Thirdly,from the perspective of local government debt,this paper reveals the macro factors that enterprises may consider when implementing M&A,which can not only provide reference for the management of enterprises to make scientific M&A decisions,but also help deepen the cognition of the regulatory authorities on the microeconomic consequences of local government debt expansion.The conclusions of this paper not only deepen the understanding of the impact of local government debt on the resource allocation efficiency of enterprises,but also provide practical guidance and evidence support for preventing and defusing major financial risks and strengthening the governance of local government debt.The policy implications of this paper are as follows.Firstly,enterprises should understand the macro institutional en-vironment when initiating M& As,and have a preliminary judgment of the risks they may face in each link,so they can more fully weigh the pros and cons.Secondly,it is necessary to deepen the reform of the local government debt manage-ment system,prevent and defuse local government debt risks,and create a good production and operation environment for micro subjects.Thirdly,it is necessary to adhere to the financial market serving the real economy,improve the effi-ciency of credit resource allocation,and reduce the financing difficulty and cost of the real sector.Fourthly,it is necessary to improve the profitability of the real economy,increase the investment opportunities of micro subjects,and promote the realization of the synergy effect of M&As.
Local Government DebtM&AFinancing ConstraintsRisk-takingInvestment Opportunities
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万方数据
