Research On The Relation Between Payment Method And M&A Performance

Since the 1990s, with the upsurge of the global merger tide, in the European and American countries whose capital market is comparatively mature, the greatest change in the merger payment mode is that the situation of taking cash payment as the core in the 1980s has been gradually turned into this situation of the cash payment mode and the stock replacement payment having equal shares. In China, before 2005, listed companies'merger payment mode was relatively single and cash payment was the main mode. Since the start of the implementation of the pilot project of the split-share reform in September 2005, the stock payment mode has been emerging one after another, providing an opportunity for us to study the relation between the merger payment mode and the merger performance.When an acquirer decides to carry out merger to a target enterprise in the market, at first, it will face three basic questions:firstly, payment; secondly, financing arrangement; thirdly, the merger performance brought from this. Though domestic and international scholars have carried out a large amount of research by centering on the factors influencing the payment mode and the impacts of the payment mode on the merger performance, and obtained fruitful results, the answers to such questions as the motive behind payment mode selection, the mechanism for payment mode selection to impact merger performance, the relation between the payment mode and the merger performance, etc, are not yet clear. What particularly needs to be pointed out is that the previous research only regarded the payment mode as a factor influencing the merger performance and considered the one-way impact of the payment mode on the merger performance, but that nobody has studied the impact of the payment mode on the expected merger performance. This thesis tries to carry out research into the interrelation between the payment mode and the merger performance.This thesis uses the capital structure theory, signal transmission theory and corporate control power theory under information asymmetry, adopts a method of combining standardized research and empirical research, takes 166 merger cases that took place in 1998-2008 as a sample, studies the relation between the payment mode and the merger performance in the cash payment mode and in the stock right payment mode, proceeds from the characteristics of different payment modes, analyzes the mechanism for the merger payment mode to influence the merger performance and clarifies the relation between the payment mode and the merger performance. The answers to these questions, in theory, contribute to the further deepening of the grasp of the merger payment mode law, contribute to revealing the sources produced by the merger performance, particularly, clarify the interrelation between the payment mode and the merger performance, and have important meanings to enriching the merger payment theory; with respect to practice, the answers have important directive significance to improving Chinese enterprises'merger payment decision-making levels, making optimum payment policies on merger practice, enhancing the success rate of enterprise merger and promoting a company's value.This thesis, on the basis of studying the merger performance in the past, considers the impact on the merger performance, of such endogenous variables produced by the merger payment mode as the change of capital structure, the dilution of corporate control power, etc. While analyzing the factors influencing the payment mode, the thesis uses the probability selection model (Probit) to regard the expected merger performance as a variable influencing the payment mode and regard other influencing factors as control variables, in order to verify whether the expected merger performance is a remarkable factor that influences the payment mode. While studying the influence of the merger payment mode on merger performance, this thesis introduces the payment mode variable into the multivariate-statistic regression analysis model and uses other variables as control variables, in order to verify whether the payment mode is a remarkable factor influencing the merger performance. This thesis carries out research in accordance with the clue:"the characteristics of different payment modes—the analysis of the mechanism of the relation between the payment mode and the merger performance—the empirical research of the merger performance influencing the payment mode (directionⅠ)—the empirical research of the payment mode influencing the merger performance (directionⅡ)". This thesis uses empirical analysis to separately verify (directionⅠ) and (directionⅡ), that is, the expected merger performance can influence the payment mode, and the payment mode can also influence the merger performance level. The enlightenment which this research conclusion gives us is that at payment mode selection, a policymaker should first predict the expected performance of a merger event that is expected to occur, and under the circumstance that other factors do not change, choose a payment mode in which the expected performance is high. Equally, while analyzing the factors influencing the merger performance, the payment mode is one of the important influencing factors because under the circumstance that other factors do not change, different payment modes have different merger performances. This has an important meaning to constantly widening the merger performance research vision and seeking the sources formed by the merger performance whether in merger theory or in merger practice.Compared with the past research documents, the innovative points of this thesis are: (1) the innovation of its selected title and research vision angle because the past research only paid attention to the one-way study of the impact of the payment mode on the merger performance but this thesis regards the merger performance as a factor influencing payment mode selection, studies not only the influence of the payment mode on the merger performance but also the influence of the merger performance on payment mode selection, launching research in accordance with the two directions of the the payment mode influencing the merger performance (directionⅠ) and expected merger performance influencing payment mode selection (directionⅡ), which have been proved in empirical analysis, revealing in an all-round way the relation for the payment mode and merger performance to influence each other; (2) putting forward the mechanism analysis framework of the payment mode influencing the merger performance, analyzing the mechanism of the formation of the merger performance from the visual angle of the payment mode. The previous analysis of the payment mode influencing the merger performance is only limited to proposing various hypotheses and each hypothesis can only state a question of a certain side, but the analysis of the payment mode influencing the merger performance is not systematic and not clear. This thesis uses the capital structure theory, signal transmission theory and corporate control power theory under information asymmetry, proposes that the mechanism for the payment mode to influence the merger performance is to transmit such information as payment mode, capital structure, financing structure and corporate control power change to the market by means of signals, is the result of the revaluation by the market for an acquirer's stock price, and is the result of the comprehensive action of such factors as payment mode, capital structure, corporate control power structure and asset structure, etc; (3) constructing the probability selection model (Probit) and multiple regression analyses model and to respectively verify that the merger performance is an important factor influencing payment mode selection (directionⅡ) and the payment mode is an important factor influencing the merger performance (directionⅠ), having verified the interrelation between the payment mode and the merger performance, and drawn the conclusion that the expected merger performance of an acquirer, the first big shareholder's shareholding ratio, the scale of both sides for merger, whether the target is a listed company and the industrial characteristics of both sides for the merger are the remarkable factors influencing payment mode selection, while the payment mode, financial leverage, the rate of tangible assets, an acquirer's scale, p/e ratio and the split-share reform are the remarkable factors influencing the merger performance.