Research On Governance Performance Of M&A Of Chinese Listed Target Companies

Under modern enterprise system, separation of proprietary rights from management rights arise questions of agency between shareholders and managers. The core purpose of corporate governance is to solve these problems of agency. As an external mechanism, merge and acquisition(M&A) is "the last means of constraint" when internal mechanism for corporate governance is invalidated. M&A can help external managers control the target enterprise so as to improve its structure of corporate governance and the performance of corporate governance. In the western mature capital market, M&A is an effective mechanism for restricting and punishing those internal managers with bad behavior. In China, it is also transparent that the more frequently M&A happens, the more important role the market of corporate controlling right plays in the field of corporate governance.Circling round the relationship between M&A and corporate governance, the author focuses on verifying whether M&A of China's listed companies has improved the structure and performance of corporate governance. At the beginning, the author introducing Manne's theory of corporate control market as a breakthrough point, formulates corporate governance theory, and analyzes internal and external governance mechanisms. Then, a complete treatment is made on the effects of M&A on improving the performance of corporate governance, the author enlarges on the interrelationship between M&A and the performance of corporate governance.In the part of empirical analysis, the author summarizes related articles and opinions about empirical analysis of corporate governance evaluation and the performance of M&A , points that the concept of the performance of corporate governance including Governance structure and financial performance characteristics and the features of the market value. The author designs a system of indicators and research methods and uses the Factor analysis method to distribute the index weight and empirically analyze M&A influence on corporate governance according to target companies with changes of primary shareholder in 2003.The empirical results show that the scores of governance structure, whether from short or long term, were significantly improved after the M&A; the scores of financial performance and corporate governance performance drops down at first and the first decline rise later. That indicates the effect of M&A on the improvement of corporate governance structure prior to which of the financial performance. While from the general comparison before and after the M&A three years, the M&A has the negative effect both on the financial performance and corporate governance performance of the target company's. Last but not least, the author gives some suggestions for boosting the development of the market of M&A and improving the level of and corporate governance according to the outputs of empirical analysis and the drawbacks from share allocation, capital market and law and regulation.