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Prevention And Control Strategies For Financial Risk On Chinese Overseas M & A

Posted on:2011-07-10Degree:MasterType:Thesis
Country:ChinaCandidate:Y LvFull Text:PDF
GTID:2189330332983017Subject:International trade
Abstract/Summary:PDF Full Text Request
Over the past hundred years, there are five large-scale M&A waves around the world, and the fifth M&A wave we are now experiencing take place in a period when human society are turning from industrial society towards knowledge-based economy society characterized by globalization, Integration and informationization, so M&A activity is particularly active. Recently, Ernst & Young survey found that 33% of U.S. companies may make arrangements for M&A activity in 2010; the Boston Consulting Group survey also found that one-fifth of all the largest companies in Europe have important acquisitions program this year. In addition, some emerging markets such as Asia and Latin America which rebound quickly in the crisis release positive signal that they are free to join the global M&A transactions. "Going out" for FDI is the important stage of development and major economic content in the wave of globalization. With the accelerated pace of development and economic expansion of the scale, Chinese enterprises as the investment subject become to approach allover the world. However, our M&A is a high return activity on one hand, on the other hand, the narrow profits, business failures, debt burden, loss of overseas assets and other issues exist in different degrees. Data show that over 50% of Chinese overseas M&A activities are failure and we can also say they give ground. Our "going out" is particularly necessary at such an important moment when the global industry is restructuring. However, it is an urgent problem about how to implement overseas acquisitions and increasing its success rate.This paper will try to explain overseas M&A financial risks of Chinese enterprises from theoretical and empirical two sides, and give suggestion about risk prevention from macro and micro perspective. Specifically, the article is divided into five parts:The first part is the preface of this paper. After the introduction of the research background and significance of the article, theory and related literatures were reviewed in this paper, then the relevant concepts of the paper are defined, finally the key points and innovation are emphasized. The second part analyze the source and mechanism of different financial risk in different M&A stages according to the three stages which are easy to distinguish and operate. And price risk mainly manifest before merger, financing and payment risks appear in the implement of M&A, risk of financial integration always appear later period. Financial risks in different stages of the three different forms, has its source and mechanism.The third part is empirical research about the financial risk of our enterprises overseas M&A, which is the key and difficult. At the first, this part use Z.SCORE Model invented by Altman to estimate the value of the overall financial risk, and discover the overall financial risk increase after the oversea M&A, then according to the case of TCL overseas M&A explain further the financial risks and important influence of it. At last, empirical analysis about financial risks in different stages is also included.The fourth part is suggestions based on the theoretical analysis of second part and empirical research of third part. Suggestions are given respectively from microcosmic angle of major companies and government perspective.The fifth part is the conclusion which is a review of this article, and this part also put forward the deficiencies of this article.
Keywords/Search Tags:Overseas M&A, Financial risk, Prevention and Control, Z. Score Model
PDF Full Text Request
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