Research On The Impact Of Reverse Cross-border Mergers And Acquisitions In The Service Industry Of Emerging Economies On The Market Value And Leverage Of Enterprises

As a typical representative of countries within emerging economies,Chinese companies have a short history of cross-border merger and acquisition(M&A).The purpose of early cross-border M&A is mostly to obtain natural resources or energy,and to participate in cross-border M&A mostly in the manufacturing industry.The new trend of the fifth wave of M&A in the world is manifested in the transformation from manufacturing sector to services sector in the field of international investment.Under the background of China's supply-side reform,the upgrading of industrial structure from traditional industries to modern service industries and the implementation of the Belt and Road Initiative,China's services sector has implemented a"Go global"development strategy in the steady development of China's services sector,with cross-border M&A growing rapidly in terms of both quantity and transaction volume.However,previous studies have focused on the market value performance and capital structure of cross-border M&A in developed and industrial sectors,ignoring cross-border M&As in emerging economies and the services sector.In order to make up for the deficiency of the literature research,this study researched,based on reverse investment theory,market value management theory and trade-off theory,taking the 2008-2017 Chinese services sector cross-border M&A announcements as the sample,how the services sector cross-border M&A firms in the emerging economies affect their market value and capital structure.As well as the various macro and micro factors that cause this effect are discussed.The core research problem of this paper is the impact of upstream cross-border M&A on firm value in emerging economies.The firm value consists of two parts,equity value(market value)and debt value(leverage).Therefore,the three main research problems in this paper will be carried out in accordance with the above two aspects:First,the impact of upstream cross-border M&A on the market value of enterprises in emerging economies and the evaluation of macro-micro key factors that make this impact.Based on the signal theory and market value management theory,this study takes 753 China services sector cross-border M&A announcements in 2008-2017 years as the sample,and through the event study method,tests the macro factors that affect the market value performance of services sector M&A,including industry type,service sub-sectors and stock market type.In addition,the influence of micro financial factors such as the size of M&A contract,ETR(Equity transaction ratio),B/M ratio,debt-to-equity ratio and enterprise scale on the market value performance of M&A enterprises is also tested.Second,the impact of upstream technology-sourcing cross-border M&A in services sector on the firm market value in emerging economies and the analysis of the related factors that cause this kind of impact.Based on the theory of market value management and reverse investment theory,this paper examines the impact of M&A experience,M&A form,M&A ETR and stock market on market value of services sector cross-border M&A,through the event study method,taking 270 China technology-sourcing services sector cross-border M&A announcements in 2008-2017 years as the sample.Thirdly,the impact of upstream cross-border M&A on the leverage of firms in emerging economies and the heterogeneous impact of micro-financial factors on the speed of leverage adjustment(LAS)based on different M&A motives.Based on the trade-off theory,this study,taking 753 cross-border M&A announcements in China's services sector in 2008-2017 years as the sample,and on the basis of three M&A motives(integration motivation,diversification motivation and policy motivation),examines the form of leverage adjustment before and after M&A,as well as the heterogeneous effects of micro financial factors(cash liquidity,financial deficits,average leverage,etc.)on the LAS.The main conclusions and theoretical contributions of this paper include the following three aspects:First,China's services sector M&A have achieved significant market value performance since 2013.In the sub-industries of services sector,only the cross-border M&A of technology services sector and public services sector has statistically significant market value performance.Among the key factors affecting the market value of M&A in services sector,the size of M&A contract is positively correlated with the market value performance of services sector.This study provides theoretical contributions to the cross-border M&A of Chinese service enterprises,and also helps to deepen the understanding of the M&A response of emerging economy stock markets.Secondly,the results of this study provide new insights into the response of stock market to cross-border M&A in the services sector.It is one of the first studies to systematically compare the market value of M&A in services sector based on industrial heterogeneity.By studying the influence of macro and micro financial factors on the abnormal return rate of service enterprises participating in M&A,this paper explains the important role of technology synergy and spillover effect,the government's support and contract size significantly to the market value of services sector M&A in emerging economies.Second,China's technology-sourcing services cross-border M&A has achieved significant market value performance.Due to the lack of M&A experience,no significant performance was achieved before 2013.Enterprises that master ultimate ownership after M&A have not achieved significant performance.Horizontal M&A enterprises have achieved significant market value performance.The M&A enterprises in the GEM(Growth Enterprise Market)market have achieved remarkable market value performance.This study points out the theoretical basis and typical characteristics of cross-border M&A in technology-sourcing services in emerging economies that have rarely been involved in the past,and deepens the understanding'of technology-seeking services sector and cross-border M&A in emerging economies.The relationship between cross-border M&A and market value performance in technology-sourcing services sector in emerging economies was sorted out.It analyzes the deep factors that affect the market value performance of the cross-border M&A of technology-sourcing services in emerging economies.The findings of this study provide new insights into the deep relationship between M&A experience,M&A forms,M&A ETR,stock markets and cross-border M&A of technology-sourcing services sector in emerging economies.Third,M&A leverage based on integration and diversification showed an inverted U-shaped adjustment before and after M&A,and the leverage of policy M&A showed U-type adjustment before and after M&A.M&A companies with greater leverage adjustment distances and higher cash mobility always adjusts faster based on all M&A motives.Actual leverage below average leverage levels can have a negative impact on LAS.This study clarifies the relationship between LAS and different M&A motives,and reveals the characteristics of cross-border M&A enterprises in emerging economies and the influence mechanism of micro-financial factors on LAS.In addition,this study,based on the differences in the motives of cross-border M&A in emerging economies,reveals the heterogeneous influence of micro-financial factors on LAS of M&A enterprises.