M&A Effect On Corporate Business Structure Of Public Companies

As China economy flourishes these years, companies become larger. In order toutilize this great opportunity to scale up company fast, more and more Chinesecompanies resort to M&A to achieve the fast speed of expansion, which could not bepossible if they depend on building plants by themselves. Especially in these two orthree years, M&A capital amount and companies bulged fast. Number of M&A casesin year 2001 and 2002 achieve the sum of previous five years.In present China M&Awave, diversification has been a common-used model for Chinese companydevelopment. Entering into a wholly new industry by multiple M&A is a convenientchannel for company to outlet their extra capital and to proceed a diversification path.Nowadays, not many companies can scale up without diversification, sodiversification has also been a hot topic in academic and economic study.Diversification exhibit advantages as well as disadvantages with a lot of successfuland failed cases respectively. In this report, we use about 300 listed companies, which were involved in M&Acases in year 2001 and year 2002, as samples to analyze whether entry into newindustries by M&A brings advantages to those diversified companies, whethermultiple M&A results in company better performance from finance point of view,whether it leads to company faster development than those without entry into newindustries, whether this kind of M&A has outstanding effect for companies.