The Geographical Rotation of Local Officials and Enterprise Cross‐city Mergers and Acquisitions in China

Abstract

AbstractThe economic impact of the geographical rotation of local officials is important in China's official management system. This study used a zero‐inflated Poisson regression model and found that the geographical rotation of local officials significantly increased cross‐city mergers and acquisitions (M&As) of enterprises. The impact of local officials' geographical rotation on M&As was more pronounced under certain conditions. These conditions included: (i) when officials were transferred from cities with a higher development level to cities with a lower development level; (ii) when the outflow cities were municipalities directly governed by the central government, provincial capitals, or separately listed cities; (iii) when the transfers of officials occurred within the same province; (iv) when the transfers took place before 2012; and (v) when the transfers happened in the years following significant central government conferences, which provided strong political incentives for M&As.