Study On Merger Performance Of Listed Corporations Merging Real Estate Companies

Listed corporations, real estate and merger are all popular key words in China's economy. Some listed corporations with strong capital support and multi financing channels have begun to merge real estate companies. However, how is the outcome of such merger? Does it have positive or negative effect on the listed corporations that taking mergers. No relevant literature can be found in research result already existed.An empirical study has been carried out to analyze the performance of those listed corporations merging real estate companies and classical theories on enterprises merger are applies in the analysis. In this paper, those listed corporations merging real estate companies during 2003 to 2005 are taken as objects. Event Study Methodology is applied to analyze cumulative abnormal return of the object corporations stock before and after the merger and Accounting Methodology is applied to analyze performance of the same object corporations. Performance of difference merger activities stemming from different motives are also be studied.The conclusion is that merging real estate companies can not make the stockholders of the listed corporations richer but merger statement has a positive effect on wealth of the stockholders and merger also has a positive effect on the corporations' performance in the long run. Effects in the short run are not very obvious. Those listed corporations motivated by the objective of resource reorganization achieve more obvious wealth effect than those motivated by the objective of business expansion, while the later has better performance.