A Research On The M&A Of Chinese Securities Industry

During the years between 1999 and 2003, a large scale of M&A wave took place in Chinese securities industry. In character these incidents happened in a rather concentrated time and in trend their models were changing from government oriented to market oriented. Compared with some developed countries in the world we can draw the conclusion that M&A are the key process for securities industry to improve its industry structure and increase its market concentration rate resulting in making the industry more stable and more efficient.Since the first securities company was established in 1985, the securities industry has experienced nearly 20 years' development and has made great progress. However, with the basic survival environment becoming more and more serious, M&A seem to be an important and necessary means to develop Chinese securities industry further.The paper mainly takes research on three fundamental aspects on the M&A ofChinese securities industry including cause, model choosing and performance. In theresearch of the cause of M&A it didn't follow traditional theories or methods, insteadusing "industry shock" theory, which is the forward theory in international M&Aresearch, and taking analysis from the view of the whole industry. The conclusion is:government policies and laws are the most important factors in stimulating thesecurities industry's merger and acquisition. In model choosing it puts the wholesecurities companies into three categories according to their different scale andanalyzes their M&A model and strategy separately. Meanwhile, it also has a deepanalysis on the establishment of Chinese and foreign joint securities firms. In theresearch of performance the paper also takes analysis from both the whole industryand the single company merger incidents. The primary method is "incident analysismethod" by which to calculate cumulative abnormal return. The conclusion is thatupon current collecting M&A cases the incidents have an obvious impact on thecompanies's market performance in short time.