The Analysis Of Wealth Effects Between Acquisitions And Floating Stockholders

Content:Using 606 acquisitions during 1993-2002 in Shanghai Stock Exchange and Shenzhen Stock Exchange, Using average stock return minus average share index return to determine excess return, this article try to find if acquisition can create value to floating stockholder or not and which factors have important influence on value creation.By demonstration research, we find: acquisition can create value to floating stockholder. During one-year period following the acquisition, floating stockholders earn excess return of 15.66 percent(arithmetical average)and 11.46 percent (weighted average). We also find: different factors have different influence on value creation. In purchase acquisition mode, cash payment form, changing business after acquisition, profit increase, respectively, excess returns are 21.56 percent, 21.07percent, 40.66 percent, 27.60 percent(arithmetical average)and 15.62 percent, 15.04percent, 42.20 percent, 30.44 percent ( weighted average). In no-purchase acquisition mode, no-cash payment form, keeping the same business after acquisition, profit decrease, respectively, excess returns are 4.09 percent, 6.37percent, 6.93 percent, 3.00 percent(arithmetical average)and 1.98 percent, 3.89percent, 1.31 percent, -7.04 percent ( weighted average). By regression analysis, we find these factors including acquisition mode, payment form, business mode and profit mode can pass relative regression inspection, these factors have notable influence on excess return.