澳大利亚新南威尔士大学金融英语作业指导-The Empirical research on the performanc

澳大利亚新南威尔士大学金融英语作业指导-The Empirical research on the performance of Mergers and acquisition and the influence factors----based on the List Firms of China

 

 

Background 

After more than ten years development of stock market in China, the number of listed companies had increased from no more than 20 to more than 1500, the behavior of listed companies’ mergers and acquisition also has more frequently. The listed companies’ mergers and acquisition activity in China had experienced from scratch, small never normal to large and regulate. At present, not only for the number of listed companies’ mergers and acquisition activities, but also the amount transaction has achieved large scale. According to the statistics of world famous market data dissemination company DEALOGIC, the amount transaction of China had reached to 65 trillion $ in 2005, and more than Australia for the first time. Became to the largest mergers and acquisition market Asia-Pacific region in addition to Japan. Actually the Mergers and acquisition is most embodies market efficiency and innovative link in the securities. The mergers and acquisition has an active role to the China integration into the international economy better, smooth realization of economic restructuring and structural adjustment. Mergers and acquisitions is the eternal topic in stock market, while the performance of mergers and acquisition research is the most important topic. Whether the listed companies’ mergers and acquisition can bring positive effects to the participating companies? What factors may affect the performance of target company and acquirer company? Many domestic and foreign scholars had published a large number research results about listed companies’ mergers and acquisition. However it has not exist agreed conclusions due to various factors, the performance effect of mergers and acquisition has been a contentious issue of academic community, the focus of debate is not only in the conclusions, but also reflected in the research methods, the mainly factors is the different sample. This paper will research the performance of Mergers and acquisition and the influence factors to the M&A. and it is significant for the development of M&A market in China.经过以上的中国证券市场十年的发展，股票上市公司的数量也从没有超过20提高到1500以上，股票上市公司的兼并和收购行为也更频繁。股票上市公司的并购活动在中国经历了从无到有，从小到大，从来没有正常的调节。目前，不仅为股票上市公司的并购活动的数量，而且交易量已达到大型规模。据世界著名的市场数据传播公司Dealogic的统计，中国的交易量已经达到65000000000000美元，2005，首次超过澳大利亚。成为除日本最大的并购市场的亚洲太平洋地区。实际上，兼并和收购是最能体现市场效率和创新环节的证券。兼并和收购具有积极作用的中国融入国际经济更好，顺利实现经济转型和结构调整。兼并与收购是证券市场永恒的话题，而并购研究的表现是最重要的话题。无论是股票上市公司并购能否向参与公司带来积极的影响？什么因素可能会影响目标公司和收购公司的绩效？国内外许多学者已发表了大量的研究成果对股票上市公司的兼并和收购。但是它已不存在的一致结论由于各种因素的影响，收购兼并的性能的影响一直是学术界的一个有争议的问题，争论的焦点不仅在结论中，也体现在研究方法上，主要的因素是不同的样品。本文将研究并购对并购的影响因素的性能和它在中国并购市场的发展具有重要的意义。

 

 

Literature review 

Since the mergers and acquisition, there are many experts and scholars research the the performance of Mergers and acquisition and the influence factors to the M&A. Mandelker(1974)firstly carried out the event study to research the performance of M&A, and found in the some risk situation, the shareholders of company can acquire the earning, but it exist some different between before M&A and after M&A。Meeks(1977)based on the M&A of UK from 1964 to 1971, and make the profit of company as the core index, and found in the M&A month, the company which was mergers and acquisitions has excess return was 2.89%, which the excess returns of M&A company was -6.396%, while the ROA decreased, and decreased the lowest after five years of deal, the earning ability of company also decreased. Mueller(1980)based on the sample of UK、USA、Germany、France、Belgium、Netherlands and Sweden, and choice the ROE, ROA and net profit margin of sales as the financial index, and compare the change of these index between before and after M&A, and analysis the different of performance of M&A, and found , the mergers and acquisitions company and the target company had quickly growth of sales. After M&A, the performance of mergers and acquisition were worse than the target company, but it was not significant. Powell, Stark(2005)based on the sample of M&A of UK from 1985 to 1993, and found the M&A improved the performance the M&A company. Bruner(2002)summary the literature of performance of M&A from 1971 to 2001, and found the M&A can improve the ROE of target company, and can acquire the 10%-30% excel earning, while the change earning of M&A company was not significant. Zhu Tao(2007)based on the sample of M&A events from 1998 to 2003, and carried out the events study to research the short and long performance of M&A, and also carried out the Tobin’Q and long-term event study, and found the M&A companies acquire the excess earning significant, while for the long-term, the M&A cannot improve the performance of company, and make loss of shareholders of company. Li Shanmin and Zhu Tao(2005)application the long term return to measure the performance of mergers and acquisition based on the sample from 1998 to 2002, and found the companies carried out the diversified mergers and acquisitions would have loss after 13 years of mergers and acquisitions. The diversified mergers and acquisitions cannot create wealth for the shareholders. Xuan Yu(2009)carried out the principal component analysis to research the mergers and acquisition event from 2000 to 2007, and found the mergers and acquisition has a positive effect to the performance of stated-own listed companies, while it has a negative effect to performance of the non state-own listed companies. Xu WeiLan and Cui Guoping(2008) carried out the event study to research the M&A events in 2002, and found the M&A increase the value and wealth of shareholders of company, it had a positive effective for the market to the mergers and acquisitions.Mark Humphery-Jenner, Zacharias Sautner and Jo-Ann Suchard(2012)research the role of private-equity firms in cross-border mergers and acquisitions, and found that private equity-backed firms were likely to become targets in cross-border M&A transactions. This effect is particularly strong in transactions where the target or its shareholders actively seek an acquirer. Private equity firms can help to reduce information asymmetries in certain cross-border M&A deals, and perform several tests to address possible endogeneity concerns.

 

 

Summary the literatures of experts previous researches, they had many research methods, the results and conclusions also were import for the theory and practice. While it also exists some shortcoming. The mainly shortcoming as follow: firstly, it had no unified M&A performance measurement method, some experts used events study, some experts applied for the financial index study, due to the time of choice is different, the conclusion also different. Secondly, the research were not comprehensive, some experts were only sue the financial performance index, while ignore the no-financial performance index. Actually, the M&A not only affect the financial index, but also affect the no-financial index. Thirdly, when research the effect of M&A to the performance of company, and not excluding the macro-economy and other factors. Actually the M&A also can be affected by the macro-economy and other factors. Fourthly, it had some different from the capital market of China from advantage countries. Fifthly, when analysis the performance of company, the experts tend to the short performance of company, while ignore the long performance of company.

 

 

This paper will research the performance of M&A for the acquirer and factors affect the M&A based on the previous research.

 

 

Objective and significance of paper

In this paper, we will research the performance of Mergers and acquisition and the influence factors based on the Listed company of China. The objective and significance of paper as follow: firstly, it will not only research the financial performance index, but also the non-financial performance index, and make us more know the effect of M&A to the financial and non-financial performance index. Secondly, it not only researches the short term performance, but also the long term performance. And found the long term performance of M&A, it will rich the theory of M&A performance. Thirdly, it will also take advises for the company to make Merger and acquisition. Fourthly, it will take advises for the government when make the rules of M&A. Fifthly, this paper mainly research the China capital market, due to the different from the China and advantage countries. So it is import to research the performance of Mergers and acquisition and the influence factors of China capital market.

 

 

 

Content and structure of paper

This paper mainly researches the performance of mergers and acquisition and the influence factors to the mergers and acquisitions.

 

Firstly describes the introduction of paper, summary the previous experts research conclusions, then lead to the topic of paper and the object、the interesting of research. 

 

 

Secondly analysis the history and the present situation of mergers and acquisition in Chin, it includes the development of mergers and acquisition rules 、regulations and the laws, the really situation of companies’ mergers and acquisitions. 

 

 

Thirdly, the empirical research on the performance of mergers and acquisition and the influence factors to the mergers and acquisition. Research the short term and long term performance of mergers and acquisition. We will choice the data of listed corporation’s mergers and acquisition in China from 2007 to 2012. Build the model, use the SPSS and Eviews software to analysis the influence factors to the mergers and acquisition.

 

 

The short term performance of mergers and acquisitions: it will use events study methods to research the short term performance of mergers and acquisitions. Analysis the performance of acquisition corporation and the acquired company before and after of merger and acquisition. It use the different return of stock between after and before mergers and acquisitions. The time rang is [-10, 10].

 

 

The long term performance of mergers and acquisitions: it will use the financial index to analysis the long term performance of mergers and acquisition. And analysis the financial index before and after mergers and acquisition. The financial index includes the ROE、EPS.

 

 

The influence factors to the mergers and acquisition: the model as follow:

    :the short performance of mergers and acquisition in t time of stock i

 : The return of equity in t time of stock i

 :the total assets of target company of mergers and acquisition in t time of stock I.

 :the state shareholders rate of target company in t time of stock i.

 : the payment style of company mergers and acquisition in t time of stock i. if pay the cash the value is 1, or 0.

 : the debt to assets ratio in t time of stock i.

 : the largest shareholders share holding rate in t time of stock i.

 : the relationship between the target company and acquirer company, if it has relationship the value is 1,or 0.

 

 

Fourthly conclusions and take some advises to the mergers and acquisition of China. 

 

 

Compare to pervious research, the mainly contribution of this paper as follow: firstly, it not only consider the short term performance of mergers and acquisition, but also consider the long term of mergers and acquisition. Secondly, it research the listed corporation in China. Thirdly, it consider different factors influence to the performance of merger and acquisition.

 

 

References

Robert F,Bruner. Does M&A pay a survey of evidence for the decision maker. Darden Graduate school of Business Administration University of Virginia. Working Paper March[M]2002.P1-23.

 

Li Shanmin Zhu Tao. The diversification mergers and acquisition can create wealth to the shareholders? The factors influence the long term performance of mergers and acquisition. Management World.2006.3:P129-137.

 

Mandelker G. Risk and return: the cases of mergers firms, Journal of Financial  Economics[J]1974.12.P303-335.

 

Meeks G.Disappointing marriage: a study of the gains from mergers. Cambridge Universiity Press[M].1997.P36-50.

 

Mueller. Profitability measures as indications of post-merger performance. Journal of Industrial Economics[J]1980.P335-344.

 

Humphery-Jenner, Zacharias Sautner and Jo-Ann Suchard. . "Private Equity Fund Size, Investment Size, and Value Creation," Review of Finance, European Finance Association, vol. 16(3),2012. pages 799-835.

 

Jensen. Michael C and Richard S Ruback. The market for corporate control: the scientific evidence.Journal of Financail Economies[J].1983.11.P5-50.

 

Franks.J.R. R.Harris. Shareholder wealth effects of corporate takeover. Journal of Financail Economics[J]1989.P225-249.

 

Xun Weilan, Cui Guoping. The empirical research of mergers and acquisition performance of listed companies in China. Statistics and information Forum.2008.8.

 

Powell, StarK.Merger bids. Uncertainty and shareholder RETURN. Journal of Financial Management[J]2005.P39-50.

 

Zhu Tao. Do managerial objectives drive bad acquisitions. The Journal of Finance March[J]2007.P10-24.