Research On The Performance Of The Market For Listed Corporate Control In China

Corporate control is both the crucial factor of corporation development and a core issue of modern corporate governance structure. Takeover of listed corporations in China has developed for more than 20 years. Takeover happened to listed corporations about one third of the market capital value every year. As securities market of China has laid the foundation of its particularity since the institution had been designed, it is different greatly from the market foundation of Western countries. In contrast to the mode of tender offer in secondary market popular in Western Countries, the control is transferred mainly by the uncirculated stocks due to shares discretion and great centralization in China. As well, controversy surrounds the issue that whether securities market in China is effective or not. So, it is still a question whether the price of stocks can reflect the management efficiency. The research on the market for listed corporate control in China is very limited now. In face of the popularity of M&A, which is sweeping all over the world, it is necessary to draw upon the theories regarding corporate control market from Western countries to research the market with a special institution background in China.This thesis summarizes the theories and empirical studies on corporate control market and these results are adapted to research on China. Based on the literature review, this thesis analyzes the status quo of corporate control market in China and compares it with other international ones. Then this thesis uses New Institution Economics to analyze the institution change course of corporate control market in China. The conclusion is that corporate control market is the result advocated by government and caused by government together with civilian institution. Further, this thesis starts from the shares discretion, which is the institution foundation of corporate control market in China, and sets up mathematical model to analyze the control transfer mechanism of listed corporations in China. The analytic conclusion indicates that transfer of control will make the new holding companies to make up their costs through getting the private benefits of control rather than endeavor to improve corporation's performance. So the corporate control market tends to be inefficient. This thesis employs event study and accountant study together to empirically study the performance of market for listed corporate control in China. The conclusion of the empirical study shows that the market for corporate control does not improve the target corporation's performance. On the contrary, the holding company is generally to speculate and arbitrage by virtue of inside information in secondary market. The conclusions of theory and empirical study indicate that the market for corporate control in China is inefficient and this problem was caused by shares discretion mainly. As a result, according to the analyses from this perspective, some good approaches can be put forward.