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Research On The Performance Of Acquirer Firms In The Context Of Share Splitting Reform

Posted on:2011-08-07Degree:DoctorType:Dissertation
Country:ChinaCandidate:J S WangFull Text:PDF
GTID:1119330332982719Subject:Finance
Abstract/Summary:PDF Full Text Request
As a significant means of expansion and integration, M&A not only optimizes the resources distribution but also propels capital market forward. Developed country has experienced a vigorous progress in M&A.Since the 19th century, there has been five M&A waves, and in modern times the trend has rising to an unprecedented height. Our country's M&A history began in mid-1980s, since then M&A has presented a picture of prosperity and specification. Due to some historic reasons, share splitting is an important feature in our capital market. Share splitting is a prominent hinders for M&A, and it leads to distinguishing feature in our country's M&A. As a catalyst for M&A, Share splitting reform laid a foundation for maketization of M&A and the dynamic wheels of M&A become increasingly powerful. So it is worth systematically researching M&A problems in the background of share splitting reform, both in theory and in practice.Researching on the performance of M&A is an important academic filed. Event Study is usually adopted in short-term M&A performance discussion; accounting study and long-term event study are usually adopted in long-term M&A performance discussion. Though the international academics have made outstanding development, the research on our country's M&A performance is just on the threshold. Accounting study is the mainly methodology we use, and event study becomes more and more important recently. Though the previous researches have got many meaningful conclusions, they seldom pay enough attention to the impact of share splitting reform. This paper is based on the institutional reform of share splitting,and focuses on the relationship among share splitting reform, trading characteristic, firm characteristic and the M&A performance.This paper also adopts event study to research the short-term M&A performance, adopts accounting study to research the long-term M&A performance. In accounting study, this paper establishes a system of financial indicator, and gets the performance index by factor analysis. In identify factors which influence M&A performance, this paper combines grouping inspection with multiple regression analysis. The sample used in this study includes M&A cases over the period 2004 to 2007, finally there are 329 takeovers satisfy our requirements in short-term study and 319 takeovers satisfy requirements in long-term study.The main conclusions are as follows:(1)The M&A performance of listed firm in our country is more obvious in short-term. In the window of (-20,30), the CAR is 6.7% which is statistically significant. It means that M&A creates values for shareholders. But in the long run, M&A doesn't improve the performance, which may due to financial restructure and speculate takeovers.(2)In the pre-announcement date period, listed firms which finished share splitting reform have a better M&A performance. In the post-announcement date period, the effect disappears. It illustrates that share splitting reform is popular to the market, but as time flies by, the market rational comes back. In the long run, share splitting reform is also a positive factor, but the effect is significant only in the fist year after M&A.(3)As method of payment, non-cash payment is more accepted. In the window of (-20,30), the CAR of non-cash payment is 14.74%. The difference between CAR is not statistically significant before the announcement date, but is statistically significant after the announcement date. In the long run, listed firms adopted non-cash payment significantly improves its performance. This phenomenon may due to that non-cash payment can save cash flows and improve ownership structure.(4)Wheatear the two counter parts of M&A in the same administration is an important factor. If in the same administration, there is a significant CAR; if in the different administration, the CAR isn't significant. In the long run, the effect remains too. In the same administration, the acquiring firm can receive more bonuses from government, and the integration cost is lower. So, the M&A from the same administration gets a better improvement in performance.(5) Trading size influences M&A performance. In the short-term, bigger size brings good performance, and this effect is more obvious from absolute size to relative size. In the long run, it turns out to the reverse direction, smaller size M&A shows a better performance. Because big size means big integration cost and the management of acquirer firms has low capability, so the long-term outcome is reasonable.(6)There is a negative relationship between the equity concentration and M&A performance. The more shares belong to the biggest shareholder, the fewer shares belong to the second big shareholder, the performance of M&A is worse. This shows that big shareholders tend to occupancies more resources.(7)If the management has a good capability, the M&A tends to improve the acquirer firms'performance. There is no evidence shows that management has arrogances in M&A.(8)In the long run, acquirer firms which have more free cash flow show a better performance improvement. It means that free cash flow hypothesis has explanatory ability. Although M&A can't create values for shareholders, management may also pass M&A decisions.(9)lf the relationship between M&A and the government is weak, the short-term M&A performance is better.Non state-owned acquirer firms have better M&A performance in the long run.This is because that the decision made by state-owned firms may be influenced by nonmarket enforces.(10)This paper also finds that, in the short run, the size of acquirer firm, the type of M&A,the profitability of acquirer firm have no significant influence to M&A performance. In the long run, the managements' share, the managements'salary, the industry cycle features have no significant influence to M&A performance. Wheatear the two firms in the M&A are related has no significant influence to M&A performance no mater in the short run or in the long run.This paper consists of 7 chapters, with the structure as following:Chapter1.Introduction. The research background and practical significance are presented first in this part, then the key problems are put forward and content arrangement of this paper are also described, finally the main innovations are listed.Chapter 2.The theory of M&A. Above all the related concepts and definitions of M&A are defined accurately in this chapter, next the academic achievements about the motivation of M&A acquired by foreign scholars are reviewed, which provides theoretical foundation for this paper.Chapter3.A review of researches on the performances of M&A.This chapter includes three parts:evaluation method for the performances of M&A, researches on the performances of M&A and factors influencing the performances of M&A. The main purpose is to summarize the recent research achievements and find their disadvantages and problems which need further analysis, which lays a good methodological foundation and research direction for later empirical studies. Chapter4.Analysis of institutional background and history of M&A. Firstly it tells a state of five waves of M&A in the U.S,secondly it analyzes the development track and characteristics at the different stages of our market; Finally it gives a brief introduction about the share splitting reform, and make a concrete analysis of the characteristics of our market in share splitting reform time and the influences of the share splitting reform on our market. Base on these it sketches an institutional framework for this paper.Chapter5.The empirical studies on the short-term performances of acquirer firms. This chapter calculates the short-term performances of acquirer firms by method of event study; grouping inspects the influences of share splitting reform, trading characteristics and acquirer firms characteristics on the performances of acquirer firms according to single factor, and takes above influences into the comprehensive consideration by multiple regression analysis at last.Chapter6.The empirical studies on the long-term performances of acquirer firms. This chapter studies the long-term performances of acquirer firms by method of accounting study, calculates the long-term performance index of acquirer firms by method of factor study, grouping inspects whether single factor has influences on the long-term performances of acquirer firms; Finally it considers the relationship between the long-term performances of acquirer firms and the following four aspects: equity structure, principal-agency, M&A characteristics and acquirer firms characteristics.Chapter7.Conclusions and policy advices. On the basis of former research, The last chapter makes chief conclusions about the short-term and long-term performances of acquirer firms, including the factors affecting performances, and displays entirely the influences of share splitting reform, trading characteristics and acquirer firms characteristics on the performances of acquirer firms, upon which it could not only offer decision evidences for acquirer firms and investors, but also provide basis for policymakers and supervisors.
Keywords/Search Tags:share splitting reform, the characteristics of M&A, the characteristics of acquirer firms, M&A performance
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