A Study On Performance Of Corporate Horizontal Mergers Of China's Listed Companies

As a prominent phenomenon in the history of our country economy, Horizontal Mergers is the objective law of enterprise's development and expansion as well as the powerful means of the industrial structure adjustment and optimizing resources allocation in our country. Although horizontal mergers have scale economy as theory support, the result in practice is not so well. This paper adopts normative research and empirical studies to examine performance of listed companies in China after their combination. We also conducted on the quantitative analysis on the basis of qualitative analysis, through which analyze the result of the performance and proposed the improvement proposal, We hope the research results and suggestions will provide reference for the formulation of policies and regulations and merges activities of the listed company.The motivation of horizontal merger is various and complicated, economic theory also tried to give merges an ideal reason to explain, but in fact, the explanation of each theory boil down the motivation to improve efficiency, reduce cost and increase the enterprise market forces, which these results are just the scale economy can bring to enterprise. China's most scholars and western scholars have argued that the pursuit of scale economic benefit is the direct reason for enterprise to carry on the merges.The empirical analysis including sample overall analysis and branch line of business analysis. The result of the whole sample research proved that scale effect is exist but not significantly and branch line of business research show that the enterprises which have a good performance after merge are more focused on manufacturing industry, but significant also has to doubt, because only a partial industry in some annual can pass significant test. To sum up, the merge performance of listed companies in country is not very ideal. The reasons are as follow: firstly, our stock market is slack of security regulation, causing some statements and relevant mergers which weakened our overall performance of strategic acquisition. Secondly, our government behavior in merger acquisition such as saving losing enterprises caused M&A earnings are not well. Finally, the low industry concentration and small acquisitions scale also weakened the earnings, even if the enterprise has obtained the certain scale economic benefit, the rising cost in operation and management also can reduce the effect. But look in bright side, the fact that small scale of companies and low concentration of industry show that our country has great potential to merge and enterprise should seize the opportunity to get scale economic benefit by merges.The paper proposed six proposals including government level and enterprise level to improve merge performance of listed companies in our country. The advices in government level include reduce government intervention activities and strengthen policy guiding of industrial concentration, perfect relevant laws and regulations, establishing multi-layer regulatory system and foster professional intermediaries. The advices in enterprise level include put attention on integration after the merger, establishing the right acquisition strategy and cultivate enterprise competitiveness.