An Empirical Study On Foreign Capitals' M&A Of Domestic Listed Companies

Under the new situation of economic globalization, cross-border M&A (Merger and Acquisition) has emerged as the main approach of Foreign Direct Investment (FDI), which is the new trend in the flow of foreign capitals during recent years. Since 1990s, there has been more and more popularity among Foreign Capitals' M&A along with the increasing of the FDI in China. After China's entry into WTO, a series of statute has been established to standardize and encourage FDI. Thereby, Foreign Capitals' M&A of domestic listed companies has become a pop topic in the economy. Under the current circumstance, it is of great significance that we study the motivation, the characteristic, the trend of Foreign Capitals' M&A and the problem of "Does the Foreign Capitals' M&A create values?". Therefore, the structure of this paper is arranged as follows:Part of introduction expounds the working background and working clue. The first chapter gives a review on Foreign Capitals' M&A. At first we define M&A and Foreign Capitals' M&A, and indicate that Foreign Capitals' M&A is the cross-border prolongation of M&A in the economic globalization; Secondly, we introduce the sample studies about M&A and Foreign Capitals' M&A; Lastly, we indicate the research methodology and the innovating pointsThe second chapter analyzes the characteristic of Foreign Capitals' M&A. First to give is the reason in perspective of foreign capitals, listed companies and local governments; Secondly, we review the development of Foreign Capitals' M&A, and analyze the models of Foreign Capitals' M&A; Thirdly, we analyze the data of industry, model and field of Foreign Capitals' M&A, then get the reasons and forecast the developing trend; Last part is the positive influences of Foreign Capitals' M&A from both macro and micro aspectsThe third chapter is the empirical analysis on stock price reaction to ForeignCapitals' M&A. The Event-study Methodology is adapted to make analysis on Cumulative Average Abnormal Return (CAR) of all samples, of samples in Shanghai market and of samples in Shenzhen market respectively. The results state that the events of Foreign Capitals' M&A make the destination companies to get positive CAR, which indicates that these events are good news for those companies and they add to values of destination companies. This chapter also is the innovation of this paper.The forth chapter analyzes possible problems brought out by Foreign Capitals' M&A and gives the related policy suggestionsBy way of study, we find that the stock price reacts positively to the events of Foreign Capitals' M&A overall. In such sense, Foreign Capitals' M&A creates values, which is of great significance. However, there is no denying that Foreign Capitals' M&A brings out a series of troubles. Therefore, on one hand we should make positive efforts to promote the development of Foreign Capitals' M&A and on the other hand we should standardize Foreign Capitals' M&A by way of bettering related laws and regulations as to Foreign Capitals' M&A.