The Study On The Profitability Of The Firms And Incentive Regime In Mergers And Acquisitions

Mergers and acquisitions has been a hot topic in industry and economic field recently. In order to provide enterprise and government with supports in policy and increase the international core competence of enterprise in a better circumstance, the M&A theory research has been an exigent task in academia. In order to direct the practical M&A, on the basis of reviewing the results of M&A theory, the objective firm pricing, the profitability of M&A and incentive regime are studied from different directions by game theory and numerical analysis technology. The main contents of this paper are as follows:Objective firm valuation is the core of M&A bargaining. On the basis of discussion on traditional firm valuation, the advantages and disadvantages of traditional methods of firm valuation is analyzed and evaluated. In allusion to the new features of net economics, methods on determining the value of virtual firm are studied, and the connections of M&A between net and traditional firms are analyzed.Based on the existing and traditional theories, the profitability of M&A in nonlinear situation is considered by introducing the degree of concavity of demand and the profitability of M&A in dynamic competitive situation is studied by introducing dynamic Cournot oligopoly competitive model respectively.Using the incentive regime of object function, the effect of incentive regime on the profitability of M&A in competitive markets is discussed by comparing the function of incentive regime in M&A.The application of conjectural variation theory in M&A and incentive mechanism are studied by using the model of conjectural variation in M&A. The differences between conjectural variation and multi-oligopoly Cournot models are compared.At the end of this thesis, a successful example is presented. The availability of implementing incentive regime after M&A is demonstrated. The feasibility of M&A and application of incentive regime theory is validated.