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Risk Management Of Cross-Border Mergers & Acquisitions And Its Inspiration To China

Posted on:2005-05-17Degree:MasterType:Thesis
Country:ChinaCandidate:Y J XiaoFull Text:PDF
GTID:2156360122499402Subject:World economy
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In the new round of restructuring of global economy, Cross-Border Mergers and Acquisitions are daily bigger the size, while their scope is broadening and proportion to foreign direct investment is growing, unfortunately, its potential risk is also rising and draws more and more concern. As China is accelerating paces and widening channels to join global economic system, Cross-Border Mergers and Acquisitions have evolved to be a major issue in our economic life accordingly. On one hand, domestic firms acquired into foreign firms facilitate foreign investment, advanced overseas production technology and management into our country, and will be helpful to the reforms and development of domestic firms especially state-owned firms; on the other hand, such Mergers and Acquisitions bring not only the acquisition from abroad, behind it are various indefinite factors and risks. In practice, many firms have fallen into dilemma because of improper Mergers and Acquisitions. Characterized by the affix "Cross-Border", Cross-Border Mergers and Acquisitions involve parties from different countries, so its risk and indefinite factors is even more complex and harder to control. Therefore, maximizing the extent to analyze risk and indefinite factors behind Cross-Border Mergers and Acquisitions and taking appropriate actions to prevent and control the risk will be critical for a Cross-Border Mergers and Acquisitions to succeed. Discussing Cross-Border Mergers and Acquisitions and its risk control is significant for China to win the challenge from WTO and economic globalization.This article consists of four parts:Part I: the development and role of Cross-Border Mergers and Acquisitions. First, it gives the definition of Cross-Border Mergers and Acquisitions: driven by some objective, the firm from a country acquires part or all of overseas firm's stocks or assets via some channels and under some payment terms, thus realize substantial or complete control over the latter. Second, it reviews the five acquisition waves in the history and the development of Cross-Border Mergers and Acquisitions, sums up the features and roles of transnational acquisition, and describes the significant impact of Cross-Border Mergers and Acquisitions on foreign direct investment, transnational corporations and world economy.Part II: theoretical analysis on Cross-Border Mergers and Acquisitions. It summarizes relevant theories about motion of foreign direct investment, e.g. Monopoly Advantage Theory, The Internalization Theory, Eclectic Theory of International Production, The Decision-making Model of Export Trading and Foreign Investment, Japanese Model of FDI. From different perspectives it explains why transnational corporations directly invest in abroad, then probe the reason why transnational corporations choose the manner of Cross-Border Mergers and Acquisitions to do so. On that basis, the article predigests and analyzes Cross-Border Mergers and Acquisitions behavior based on Market Structure Theory, the basic theory of microeconomics. In short words, it is intended to compare the cost and earnings between the two choices: acquiring a company and creating a company if both are feasible, the more profitable way will be selected.Part III: Risk and risk management of Cross-Border Mergers and Acquisitions. This part summarizes major risks of Cross-Border Mergers and Acquisitions, and further analyses the interactive relationship between financial risk, operation risk and innovation risk in Cross-Border Mergers and Acquisitions, and point out that all these risks coexist throughout the process of Cross-Border Mergers and Acquisitions, and between them exist close, correlative and interactive relationships. It thus concludes that it is necessary to improve risk management in Cross-Border Mergers and Acquisitions, so as to realize Cross-Border Mergers and Acquisitions and achieve expected objective.Part IV: The Inspiration of Cross-Border Mergers and Acquisitions risk management to China. This part analyzes the actuality and tren...
Keywords/Search Tags:Cross-Border
PDF Full Text Request
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