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A Study On Merger And Acquisition Effects Of Chinese Listed Companies

Posted on:2008-05-03Degree:DoctorType:Dissertation
Country:ChinaCandidate:X W ChengFull Text:PDF
GTID:1119360218459871Subject:Technical Economics and Management
Abstract/Summary:PDF Full Text Request
M&A, one of the most dynamic events in the capital market, best reflects the efficiency with which the market operates. Most businesses, especially those in the emerging markets amidst transition, perform poor in harnessing the power of the market economy, achieving long-term and stable operation, keeping strict financial management, upgrading their long-term research and development, and updating their products and services. M&A might be a prescription to their problems. How to capitalize upon M&A to realize business restructuring, update the products and services offered, enhance corporate governance, build confidence in the capital market and attract investors has emerged as a growing concern for investors, the management and scholars.These years witnessed an increase in the M&A deals among Chinese businesses done in diversified forms, within a broader scope and involving a growing amount of foreign and private capital. M&A effectiveness is something that has to be studied before hand in an all-around manner to render the actual M&A deal more efficient under both theoretical and practical contexts. Most scholars in China, however, fix their eyes upon the changes in the business performance following the M&A rather than the factors that have much bearing upon the M&A benefit, let alone the evaluating of the deal's benefit after it is done. The outcome is that there are no suggestions of much practical significance to the regulators and the management on the policies and operations that need to be put in place for better results.By analyzing the M&A causes and evaluating Performances, the article using Data Envelopment Analysis (DEA) and factor analysis approaches to studying the vertical M&A , Horizontal M&A and Conglomerate M&A, and suggestions to the securities regulators and the management on the policies and practices that need to be put in place to make the capital distribution more efficient, which will be of much significance to promoting the sustainable economic development in China.In viewing from vertical M&A, reducing of transaction cost is primarily translation market transaction to internal transaction. The effect of vertical M&A emerges after one years is notable, though not in the prime of life, it shows via merger and acquisition internalized market transaction, stabilized supply and marketing canal, reduced market uncertainty. But farther empirical analysis indicated that the effect gradually gliding especially after the third year of M&A, and the decline tendency comparatively evidence. This is a declaration that there is a wear in course as well as effective syntaxes. None but established an oregano-whole, can keep sustainable growth of operation of business' outstanding achievement. As a matter of fact, M&A in enterprise is not simply merger, but the process of integration of different enterprises. The integration process will inevitability lead to various conflict, in turn raises influence enterprise whole effect, so there exists high costs of integration.In regard to horizontal M&A, the main agent of merger and acquisition is pursuing scale economics effect. Scale economics coming from horizontal M&A lay in cost fell and market power enhance as well as monopoly. Empirical analysis listed company of our country's shows that, the effect of scale economics exist distinctness, especially in the prime of life of merger and acquisition, therefore proven size of business prevalence small, vocation degree of concentration on the low side, through M&A, it could improve scale economics level. But real evidence resulting that effect of scale economics coming from merger and acquisition is clear or not, cause nonessentiality merge and acquisition, government intervention. So further increasing horizontal M&A, optimizing industrial system structure and establishing group of enterprises, is primary target in our country.In view of conglomerate M&A, the agent are primarily synergistic effect, industrial effect and danger dispersion effect. In view of practice of listed company, a great many enterprise set foot in information technology, biologic medicine, neomaterial high-technology industry through conglomerate M&A. Some listed company positively realized industry transformation through M&A, incubation new growth pole, and outstanding achievement is able to step up. But view from real evidence, the effect of conglomerate M&A was not so high compared with expected, but rather presentment descendent trend. But if we explore thoroughly, perhaps we could find that there are mergers and acquisitions by Chinese enterprises in the misunderstanding of conglomerate M&A, ill-defined property rights and excessive administrative intervention, intermediary services are inadequate. The law does not regulate the M&A enterprises and internal operations are not standardized external factors hampering the effect of conglomerate M&A playing.The full text is divided into four parts, the first part is Introduction, the first chapter; The second part of the theoretical analysis and practical basis, includingⅡ, ChapterⅢandⅣ, because of Corporate Acquisitions in the research literature on the review and analysis, M & A motivation is to explain the complexity and variability. below to explore further evidence to lay a theoretical foundation for mergers and acquisitions; PartⅢempirical testing and analysis into the effects of mergers and acquisitions, is the core content of papers, including ChapterⅤ,Ⅵ,ⅦandⅧ; M & A is the fourth part of the conclusions and policy recommendations, ChapterⅨ. In this way, empirical data on the use of China's securities market, using factor analysis, DEA analysis, non-parametric tests, such as statistical analysis of mergers and acquisition in the company's overall performance before and after the change, and control characteristics and the relationship between changes in overall performance, the system proved. The innovative research results mainly are:(1) Inspected the M&A market's overall performance. Found on the entire merger market, M&A occurring in the first year, or one year and two years after the merger, despite the acquisition of listed companies led the overall company performance to improve performance.(2) Put out and tested the vertical M&A in Chinese securities market has not reduced uncertainty about the risks and costs. The empirical results show that vertical M&A : Merger year than the previous year's financial situation a lot better. Many listed companies, only the risk of the acquisition, the purpose permitted, Only the deterioration in the financial position of the circumstances under which they carry out mergers. This is consistent with the conclusions of many different literature, but in reflecting the actual situation of Chinese listed companies.(3) Verification of horizontal M&A and non-substantive merger of the widespread phenomenon of excessive government intervention. The results showed: horizontal M&A a year to two years after the merger trend in the financial situation is deteriorating, the third year after the merger financial situation has improved compared with the second year after the merger but the effect was not significant. mainly as a result of the deteriorating financial position of the majority of the transactions are horizontal mergers and acquisitions, lead to a large number of non-tradable shares held by major shareholders of listed companies grasp the actual control, In order to obtain the right to control their private income and plunder of the wealth of small shareholders, the so-called "tunnel acts."(4) Merger and certification from the mixed reality, diversify blindly result have a negative effect. Mixed results show : M & A mixed year with the financial situation does not change then, Merger and acquisition that year after year a significant downward trend. The empirical results of listed companies mixed merger exposes the problems that exist, many companies are ignoring their own reality, rush into a hot industry, and as competition intensifies, companies make huge profits lost an embarrassing position, dilemma. For this reason, our emphasis on the adjustment of the industrial structure, promote industrial restructuring process must proceed from actual conditions, According to the internal and external conditions of the corresponding decisions, and not to blindly diversification to ensure that the main business bigger and stronger.In short, in the abstract view, enterprise merger and acquisition has active contribution in regard to optimized allocation of resources, realized effect of scale economics, depressed transaction cost. decentralized operation venture, and promoted industrial structure transition and upgrade. However, real evidence with the result shows that, actual effect of merger and acquisition not larger than we expected .The reason is that corporate mergers and acquisitions is a long-term, arduous and complicated economic activities, in the process, The assets related to different enterprises, businesses, organizations and cultural integration requires leadership, and the personal efforts of the whole team. If conformity is no good, the effect of M&A is indefiniteness so far as to present incur a loss for enterprise So paying attention to conformity of enterprise merger and acquisition is guarantee for its good effect.
Keywords/Search Tags:Enterprise merger and acquisition, Merger and acquisitioneffect Vertical merger and acquisition, Horizontal mergerand acquisitionConglomerate merger and acquisition, Merger and acquisitionconformity
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