Research On The Vertical Contagious Mechanism In Horizontal Mergers

The merger is usually not an isolated activity in the industries linkage complex networks (IO Networks). The launch of a firm’s merger will usually induce a linkage firm’s motivation of merger, which forms the phenomenon of dynamic merger, and macro to presents the characteristic of merger waves. Dynamic mergers will not only influence the evolution of the industry linkage structure, but also influence the firm’s competitive interaction tactic. Simultaneously, industry linkage structure is a very important variable on firm’s merger motive. Thus, the research on the model of dynamic merger between different industries by using of linkage structure variables appears to be extraordinary important on theory and reality, under the background of Chinese high speed development and large scale industrial structure adjustment and restructure.At present, we can find a great deal of horizontal mergers in a series of related industries, such as automobile, iron, steel, cement, machinery manufacturing in China. However, there are many achievements in the researches of merger waves. But authors are mainly aimed at a single M&A events (such as M&A performance, strategic matching, the integration after M&A, etc.), or M&A in the specific industry (e.g., banking industry, beer industry),which makes us know little about the M&As contagious mechanism.Therefore, this document attempt to utilize the method of complex network analysis to build the theory model of M&A contagious between different industries (regions). Take all industries and regions of our country as an example, to study the vertical contagious mechanism in horizontal mergers, which means to analyze why the merger of firm A to B in one industry (region), will induce the merger of firm C to D in other industries (regions), firm E merger firm F,and series of cascade merger effect in the structure evolution of industries (regions) linkage networks, and ultimately forming the phenomenon of dynamic M&As.This dissertation firstly builds the theoretical model of vertical contagious mechanism in horizontal mergers. Then we select one case to test the formation mechanism of M&A contagious between the appliance manufacturing and the retail chain enterprises in China. Secondly, empirical analysis of mergers propagation between different industries and regions. Thirdly we construct two layer networks model. The first two layer networks is M&As network and industries linkage complex networks(IO Networks).The first layer (M&A complex network)is built by using the data of Chinese strategic mergers in2002-2012.The second layer (IO Networks)is built by using the data of Chinese input-output tables in2007.The second two layer networks is the M&As networks of two vertical linkage industries(such as Non-ferrous metal smelting&alloy manufacturing and metal products manufacturing).Then we calculate the attribute indexes of two networks’topological structure, and analyze the relativity of industry linkage structure variables and merger action variables. Fourthly, we analyze the M&A contagious effecting influence factors in IO Networks. Finally, build the Complex Networks of cross-region M&A(CRMAs),and analyze the spread rules of M&A contagious in different regions.The mainly conclusion of this dissertation:(1)Through researching on the horizontal mergers propagate in vertical industry chains,we found that horizontal mergers propagate between customers and suppliers by parallel M&As, which indicates that some enterprises’horizontal mergers are more likely to be the motivation and results of its customers or suppliers’horizontal mergers, namely "M&A is a driving force of the M&A. and which further enrich M&A motivation theory and also support the countervailing power hypothesis.(2)the statistical property of the double layer complex networks and cross-region M&A complex networks(CRMAs) which built in this document corresponded to the complex network’s character of scale free, small world.(3) the double layer complex networks has significant values in the analysis of the firms’M&As contagious actions, through the research we found the remarkable relativity between industries linkage structure and merger action.(4) Based on the M&A contagious model in10networks, we found two important factors that influence M&A contagious. One is the distance between different nodes in IO networks, another is the mergers scale of other related industries. The closer the distance between the nodes is, and the greater be impacted by mergers from other industries, the higher possibility of M&A contagious is.(5) we found that the resource control ability is very different in different Chinese provinces and cities of the cross-region M&A complex networks. The majority of provinces and cities do not have the capacity to control resources, only a few developed provinces has high resource control ability.