Wealth Effect Research On The Acquisition And Merger Of Enterprises

Merger and acquisition (M&A) plays an important role in the rapid growth of China's economy. Regardless of the motives,it ultimately leads to the redistribution of social resources, and it has a significant impact on stakeholders. The first enterprise merger case in new China occurred in 1984, when Baoding Textile Machinery Manufacturer merged Baoding Knitting Instrument Manufacturer. M&A in China's capital market began with "Bao Yan event" in 1993.During the past 10 years, M&A in western world began to shrink,owing to economic depression and weak stock market, On the contrary, China was going through the first wave of merger and acquisitions during the same period presenting a blowout under favorable macroeconomic situation.In the past decades, economists and financial experts have made extensive and in-depth research on listed companies, and obtained many achievements. All in all, their main concerns are motivation for merger activities and corresponding economic consequences. Using the event study methodology, the research on economic consequences is mainly M&A short-long term performance analysis in order to clarify how M&A influences share price. Therefore the core concerns is the influence on shareholders' Although research conclusions vary greatly, the mainstream's view is that M&A will cause damages to shareholders'interests, which is called "merger mystery".In recent years, scholars began to pay increasingly attention to other stakeholders besides shareholders on corporate governance research. This PhD Dissertations is inspired by this thought.M&A is a significant event for a company, which will not only affect shareholder's benefit, but also affect creditors, executives, ordinary employees and local government, as far as economic consequences is concerned that company's equity structure varies, the M&A influences on the controlling and medium -small shareholders are also different. In order to solve M&A mystery, we can not simply consider the M&A's influence on share price, instead we should do research systemly on each stakeholder. Only if companies pay close attention to the interests of all the stakeholders and make them balance, M&A market could develop healthily, and this is the topic on which the paper attempts to study and answer questions.The article is divided into six chapters except introduction, with main contents and ideas being listed as follows:Introduction part. This chapter introduces research backgrounds and significance. It puts forward the feasibility and necessity from the perspective of stakeholders on M&A, It also defines some important concepts related to M&A and analyzes the relationship between stakeholders and M&A. Finally the whole study idea, logic structure, research methods are given.Chapter 1 is M&A theory and literature review,which summarized M&A theory from two aspects:M&A motivation and M&A economic consequences. On the basis of previous studies of the M&A theory, the author reclassifies value creation effect theory, wealth redistribution theory, listed effect theory.Next the paper reviewes M&A's wealth effect on stakeholder and summarizs the defects in the previous research. Finally it makes a systematic commentary on research methods used on M&A wealth effects.Chapter 2:The analysis on M&A characteristics, of listed companiesThis chapter analyzes statistically five waves of merger and acquisitions occurred in U.S., and summarizes that American merger activities were influenced by the level of economic development, M&A interests of stakeholders and non-economic factors.At the same time, through studying statistical data of M&A deals from 2001 to 2009,the article figures out a series of M&A'features: characteristics of time distribution, industry distribution, operating performance and asset-liability ratio and acquisitions transaction,etcChapter 3:M&A's influence on shareholders.This chapter selects some M&A deals from 2004 to 2007 as research samples which are divided into two phases,samples from 2004 to 2005(bear market)and samples from 2006 to 2007 (bull market). The chapter investigates the listed company which involve both asset purchase and share purchase, utilizing short-term event method CAR to test a short-term M&A effect of the shareholders' wealth, using the accounting index and Tobin Q to analyze the long-term M&A effect of the shareholders'wealth, testing empirical relationship between the short and long term wealth effect and influencing factors.Chapter 4:M&A's influence on Creditors'influenceIn this chapter, the author explains the background of M&A and creditor protection and analyzes current capital structure of listed companies and creditors facing risks and benefits,from four aspects:state-owned assets management reform affecting enterprises'capital structure, corporate bonds market development influencing enterprise debt structure, financial reform and development of enterprise influencing banking loan structure and the relevant law protection of the creditor. Secondly, after reviewing on the related literature, creditors wealth effect theory on M&A are commented from four aspects.capital structure, debt maturity structure, short-term debt paying ability, schedule of servicing capacity and creditors benefit. Finally, selecting China A-share listed companies during 2004-2007 as a sample, the paper adopts empirical method to analyze the M&A effects on assets-debt ratio, long-term debt ratio, short-term loan scale, cash ratio and liquidity ratio, interest safeguard multiples and interest expense ratioBesides, the author provides an evidence for corporate capital structure and debt structure changes cause by making a positive analysis on funding sources before and after M&A.Chapter 5:M&A's influence on Executives and staffAfter studying the wealth effect of shareholders, the creditors, the chapter makes some additional research on another important stakeholder-executives and staff. Firstly the salary and on-the-job consumption concept are defined, then the related merger theory of executives and staff on management power theory, decision-making theory, management theory of socialist are summarized Finally researching M&A deals from 2004 to 2007, the article empirically investigates the wealth effect of executives and staff by regarding the senior executives'monetary compensation, senior executives'duty consumption, staffs monetary compensation as explained variables.Chapter 6:M&A's influence on government. In former chapters, the author shows much more consideration twoards M&A activities that affect individual economic interests.This chapter pays more attention to the social efficiency--namely, whether M&A can increase fiscal revenue by improving tax, whether M&A can increase employment by expanding the scale,whether M&A can increase wages by increasing employment. Firstly, the chapter summarizes and reviews the relevant literature about external effects on the tax planning and synergy effect, support and hollowed theory. Then the author identifies taxation, number of employees, employees total wages as explained variables, and makes an empirical test, by building the Level model and Change model. The results support generally that M&A will bring government and society favorable wealth effect.The author thinks that the innovation of the paper is embodied three aspects as follows:Firstly, the article studied systematically M&A economic consequences from the view of stakeholders.Secondly, M&A features of the listed companies are illustrated elaborately including time distribution, industry distribution, the company performance and leverage ratio, relationship between the two sides of M&A and the corporation propertiesThirdly, the paper completely measures benefits and risks of the creditor using financial index,which discusses the M&A influence on creditors interests in an empirical view at the first time.Because studies on M&A economic consequences involve many subjects such as economy, management and law, this paper only focuses on financial field,which means there may exsit some non-rigorousness and mistakes. The author sincerely expects that all teachers and classmates point out the flaws for correction if there is any.