Value Effect Analysis On Control Right Transfer Of Listed Companies In China

With the rapid development of modern economy, corporate control issues have not only become the core of modern corporate governance structure but also become one of the decisive factors for the development of the company. That resulted in value effect issues of target companies in process of Transfer of control. Although value effect issues of the transfer of control is studied in-depth by foreign academics, for a special system features background of our country, it is of great significance that conducts in-depth and specific study on value effect over the transfer of control of China's listed companies.This paper uses the event study framework, taken the target companies listed companies in China that happened control right transfer during 2003 to 2005, to make an empirical study for their value effect issues. Selecting event window day including 15 days before and after the date of formal notice of the transfer of control as well as the formal noticed date, analysis and significant test on average abnormal return rate (AAR) and cumulative average abnormal return rate (CAR) of event window days were taken and to review the value effect of control right transferred target companies. First, to study the effect on the value of the overall sample; then to classify the overall sample according to the transaction mode, the buyer nature of an enterprise, extent of the transfer of control, the ultimate controlled buyer type and the percentage of shares held by buyers after the transaction as different variables, and to take the corresponding empirical research for the effect value of different conditions, then identification and analysis on qualitative factors affecting the effect value of transfer of control of the target company is implemented.In addition, in order to establish ties between abnormal return rate (AAR) in the case study method and accounting statements of financial indicators, This paper took regression analysis for total abnormal return of every stock of the overall sample over a 31 -day window period with the corresponding financial indicators to study their correlation and correlation measure, therefore it put the accounting statements linked to the stock market and be conducive to better study the value effect issues of the control right transfer.The research shows that the control right transfer of the whole of China's listed companies have a negative value effect to the target companies. In the different classification of overall samples, when the transactions paid for the transfer, and when the transaction is completed acquisition of the shares in proportion to the share of more than 50% of the company, there has been no significant difference between CAR and zero or between AAR and zero. In other cases of the significant test, the CAR significance is less than zero, and not significant difference between AAR and zero. However, under different circumstances, the AAR & CAR trends are quite different, so the value effect are different.The regression analysis between financial indicators associated with the abnormal return showed that there is strong linear relationship between the abnormal return and three financial targets, including earnings per share, net profit and main business incomes.This shows that China must further strengthen marketization of control right transfer, and reduce the government's intervention, further strengthen the equity division reform, to encourage the participation private enterprises in China and regulate affiliated transactions and avoid the transfer of control with Bad motives.