Theoretical And Empirical Study On The Relationship Between M&A Motives And M&A Premiums Of The Listed Firms In China

With the development of our capital market, M&A in the listed firms increase greatly in recent years. Theorists and empirics pay more attention to M&A. This paper studies the relationship of M&A motives and M&A premiums of the listed firms in China.Firstly, the paper reviews three main M&A motives regarded in the study field. Secondly, the paper analyzes the influential factors on the M&A premiums from foregoing three M&A motives and puts forward several hypotheses. Lastly, the writer collects the M&A data from year 2002 to June of the year 2006 to test these hypotheses in China by the empirical study. This paper includes five chapters.Chapter 1 introduces the study. The authors introduce the development of the M&A and the present study about M&A in the world. Then the authors put forward the main problems which will be researched in this study, the significance and the frame of the study.Chapter 2 reviews literature. Firstly, the authors review literatures about three motives of M&A. Then the authors review literatures about M&A premiums.Chapter 3 describes the study design. First of all this chapter presents the research process. Then it introduces the sample selection, variables definition and calculation. In the end it particularly analyzes the relationship of the M&A premiums and the M&A motives and brings forward the study hypotheses.Chapter 4 empirically studies the relationship of the M&A premiums and M&A motives of the listed corporations in China. The paper studies the effects on the M&A premiums from every M&A motives, then studies the effects on the M&A premiums from all three M&A motives.Chapter 5 is the conclusions and the limits of the study. The conclusions include: Firstly, the correlation between the diversify M&A and the acquisition premium is significantly positive. This is not consistent with the theory and hypotheses. Secondly, the correlation between the outside director's seats of the board in the acquirer and the acquisition premium is significantly negative. This is consistent with the theory and hypothesis, that is to say, the bigger the outside director's seats in the board, the smaller the acquisition premium. Thirdly, the acquisition premium is positively associated with the correlation between the returns to the target firms'shareholdersbefore a year of M&A. Many acquirers tend to merger those firms with wonderful performance in China now. Forth, our market economy is affected greatly by the state for our market economy central to the public-owned. Those M&A are not normative for the M&A pricing affected heavily by the state. Last, M&A premium in China is mainly caused by agency cost theory, rarely by synergy theory and seldom by overconfidence theory. After concluding, the authors point out the limits of the study.