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

Abstract

The economic impact of the geographical rotation of local officials is important inChina's offi cial management system. This study used a zero-infl ated Poisson regression model and found that the geographical rotation of local offi cials signifi cantly increased cross-city mergers and acquisitions (M&As) of enterprises. The impact of local offi cials' geographical rotation on M&As was more pronounced under certain conditions. These conditions included: (i) when offi cials were transferred from cities with a higher development level to cities with a lower development level; (ii) when the outfl ow cities were municipalities directly governed by the central government, provincial capitals, or separately listed cities; (iii) when the transfers of offi cials 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.