Study On Target Companies' Characteristics Of Foreign M&A

Since 1990s,under the situation of economic globalization, the flow of capitals has been more and more convenient, and the transaction amount of M&A has increased significantly. At present, the global financial crisis caused by the United States sub-loan crisis is spreading from the USA to other countries. With the developing of the financial crisis, the pace of economic globalization is going to accelerate further. The fifth wave of global M&A will raise the new round of turbulent sea. From the global trend of transnational investment, we can find that for economic development around the world it is an important strategic choice whether they use cross-border M&A attract foreign investment adequately or not. There is no exception for China. For China is an important member of the WTO, the global M&A wave of foreign investment is penetrating the Chinese capital market gradually. In this situation, it is very significant to research the behavior of foreign capitals' M&A in Chinese capital market and make good use of foreign capital to improve the value of enterprise and develop Chinese national industry.In this paper, financial characteristics and non-financial characteristics of target companies of foreign capital's M&A in Chinese capital market are incorporated into the econometric model together. On the base of previous studies, in order to help foreign companies to find and choose the target companies the writer uses research methods combined by normative research and empirical research to expound characteristics of target companies of foreign capital's M&A in Chinese capital market by taking into the actual situation of Chinese capital market.The simple descriptive statistic analysis of target companies of foreign capital's M&A show that: from 1999 to 2007 the target companies mainly occur in the manufacturing industry, and gradually spread into the other industries, such as traffic carrying trade, real estate; the area of M&A appears from the eastern China to middle and western China; those supported by foreign capital's M&A of industrial policy probably occur foreign capital's M&A. The study of econometric model shows that we can predict characteristics of target companies of foreign capital's M&A using the data of the last year of the M&A; the study get a model can correctly predict 70.9% of the target companies of foreign capital's M&A ,which including five remarkable characteristics such as equity ratio, net rate of main business, return on total assets, growth rate of business return, the proportion of b stocks and total stocks.At last, the study puts forward policy suggestions and corresponding strategy of listed companies on the basis of empirical results: to analyze the influence of foreign capital's M&A on Chinese economic environment; to take active measure so as to prevent the hostile M&A; to make laws and regulations of foreign capital's M&A in order to strengthen the policy guidance;to establish the risk prevention mechanism of foreign capital's M&A and to take as soon as possible; to promote information disclosure system of foreign capital's M&A continuously; to develop market mechanism of foreign capital's M&A and cultivate national enterprises vigorously and to raise brand awareness and maintain the independent useful right of brand.