Pricing Mode, Premium Rate, Mid-and Long-term Market Performance

Control right transfer(CRT) has depeloped with the reform of the state economy and construction of the capital market. Althought these M&A activities have attractedmany researchers, few studies pay attention to the core issue------price. Therefore,this paper emphasizes on pricing mode, analysing its impact on earnings management and market performance.The paper discovers that pricing mode has impact on the motivation of earnings management. CRTs with paperment often motivate listed companies to adjust DA, so as to make companies' equity seem low and premium rate seem high. This adjustment is made to meet the regulations concerning pricing for transfering stated-owned stock. Different motivations lead different amount of DA adjusted by listed companies. Empirical results show that overrall, CRTs without payment have no significant DA while CRTs with payment have significant DA even other factors such as "big bath" have controlled.Utilizing the coefficients of the regression between equity per share and price per share, the paper estimates nominal premium rate and real premium rate. This procedure not only proves the existence of motivation to manage earnings, but also discovers real premium rate is quite the same as premium rate with little DA in the market.Considering the different way that the pricing mode of CRTs has impact on market performance, the paper divides the influence of pricing mode into prophase part and anaphase part. This division is made for distinguishing fake account that defers recognizing perfomance before CRTs until CRTs are finished.Empirical tests show no significance for prophase influence of the pricing mode. Meanwile, significant anaphase infuence of the pricing mode does exist during the 18 months after CRTs. That is, CRTs with payment can improve short- and medium-term market performance. However, pricing mode shows little significant influence on market performance.The paper contributes in following aspects: paying attention to the comparability when choosing data; considering earnings management in the research on CRTs; conducting a thorough research on pricing mode and its influence on market performance; estimating real premium rate; calculating DA with accurate industrial data; using the precise method of bootstrapping to test market performance.