| As an important link for optimizing equity structure and promoting the optimal allocation ofstock assets, company mergers and acquisitions has been the important topic which the world scholarsdiscuss and research, and studies of M&A performance is one of important content in the study ofmergers and acquisitions. Over the past30years, scholars all over the world made a lot of research onM&A performance, and achieved a consensus that in the process of M&A, the shareholders of targetcompanies have significantly positive excess return, and most acquiring companies’ benefit is neutral,the worse may be loss. The western scholars explained this problem from outside agency conflictbetween shareholders and the inside managers. But in the1990s, people found that different with thediffuse ownership of British and American countries, equity concentration is the dominant form ofownership structure in most of the countries and regions in the world. On the one hand, equityconcentration makes controlling shareholders have strong motivation and ability to supervisemanagers’ self-interest behavior, on the other hand, due to the serious deviate from the cash flow rightand control, the controlling shareholders encroach on the company’s resources to obtain privatebenefits of control with its control rights, and merger and acquisition activity also can become atransportation tool for the controlling shareholder to exploit the small shareholders. Especially in thecountries where the legal protection of investors is weaker, this kind of phenomenon is more serious.No doubt this provides a new perspective for the research of China’s listed companies’ M&Aperformance.Due to historical reasons, the equity structure of listed companies in our country is highlycentralized, and the interests conflict between the ultimate controlling shareholders and minorityshareholders is particularly prominent in the listed companies in our country, and the widespread lackof protection for minority shareholders, the relevant legal system is not perfect. So, the ultimatecontrolling shareholders’ private benefit of control is widespread. In addition, the purpose ofestablishing securities market in China is to serve the reform of state-owned enterprises, thestate-owned companies is a large share in listed companies occupy, also there are many privateenterprises successful listing through various channels, so from the properties of property rights of theultimate control, the listed companies in China can be divided into two categories, the governmentand non-governmental control, and according to the government administrative level of the control,the companies controlled by government and can be divided into the companies controlled by thecentral government and companies controlled by the local government; According to the ultimatecontrol of the control way of exercise, and can be divided into direct control of horizontal structureand indirect pyramid structure. These enough to show that the system of ultimate control and the governance structure of listed companies in China have very big difference from the westerncountries.Capital market of China is an emerging market, at the same time, its development is rooted inthe economic transition, and the marketization process is not balanced between the various regions,Fan et al.,2012). Due to the external market environment is an important part of corporate governancesystem, it will affect the ultimate controlling shareholders, in turn, affect the company merger andacquisition performance. Therefore, we must combined with the governance environment of listedcompany, when we study the problem of company mergers and acquisitions performance from theangle of ultimate controlling shareholders.Based on the above system background and the need of practice in our country, this article makesreference to existing research results at home and abroad, using the public data of relevant listedcompany, from the angle of ultimate controlling shareholders to analyze and test the performance ofmergers and acquisitions of listed companies in China. Eventually form the main research conclusionand enlightenment as follows:First, the acquisition of most of the company after the merger in1-2years had fallen to long-termmarket performance, overall M&A brings to the acquired company’s shareholders wealth loss;Ultimate controlling shareholders’ cash flow right has a "incentive effect", but as the two rightsseparation degree increases, the ultimate controlling shareholders’ behavior of exploit minorityshareholders by a merger and acquisition investment is more serious, also the mergers andacquisitions performance is bad, and this kind of phenomenon is even more significant in the high freecash flow and low growth non-state-run listed companies. So we should vigorously promote ourcountry to establish behavior restraint mechanism under the special background of the ultimatecontrolling shareholders in this paper.Second, the government control companies, especially local government control companies existineffective merger behavior which cause by government intervention; Pyramid can restrain thenegative impact of government intervention on M&A performance, and this effect is also moreobvious in the companies local government control, and there is no evidence that governmentintervention affect M&A performance in companies controlled by the central government andnon-governmental control, thus the pyramids protection effect is not obvious. We should furtheraccelerate the separation of government and enterprises, reduce the government’s intervention oncorporate behavior, and constantly improve the degree of legal protection for investors.Third, the greater the ultimate controlling shareholders’ separation degree of cash flow right andcontrol, the company are more likely to make diversification M&A, further diversification M&Aperformance was found to significantly lower than the trade performance of M&A, and this kind ofphenomenon in non-governmental control company is more obvious; Tend to local government control of the company with regional mergers and acquisitions, and city of M&A performance islower than the foreign mergers and acquisitions. So we should pay more attention to larger degree ofequity structure deviation, so as to improve the efficiency of supervision, and actively improve thestructure of enterprise property rights, break the regional economic blockade, effectively prevent thelocal government in corporate mergers and acquisitions in the excessive intervention, maximum limitpromote mergers and acquisitions market.Fourth, marketization and corporate mergers and acquisitions performance are related, and themarket environment to improve reduced proxy conflict between the ultimate controlling shareholdersand minority shareholders, thus inhibiting the negative effects of two rights separation on M&Aperformance; Ultimate controller’s property of the government control would weaken the governanceeffect of marketization process to company merger and acquisition performance, and thisphenomenon is more obvious in the local government control companies; In the companies controlledby local government, pyramid hierarchy is positive with company mergers and acquisitionsperformance, but with the advancement of marketization, the protection effectiveness of pyramidhierarchy will weaker. Accordingly, we should coordinate the interests of ultimate controllingshareholders and minority shareholders through internal governance mechanism, at the same time, weshould also actively promote regional marketization process, strengthening the legal protection ofminority investors, to build a standardized, fair competition environment for companies. |
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