Study On The M&A Performance Of Listed Companies Based On Industry Life Cycle

In order to consolidate their position in the market,obtain higher returns,and extend the life,each enterprise in different stages of industry life cycles will adopt different development strategies.M&A is an important way and mean for expansion and development.At different stages of industry life cycle,enterprises should choose different M&A approaches to achieve the best results.This paper is supported by M&A and M&A performance theory and industry life cycle theory,based on the hypothesis of 'Industry Life Cycle and Merger Type'.When the enterprises in different stages of the industry life cycle take different types of merger,their performances are different,too.In order to test the applicability of the hypotheses,this thesis will divide 143 A-Share listed companies in Shen and Hu markets in 2005 according to M&A types,and divide them into 3 types on the bases of industry life cycle theory:growing industry,mature industry and declining industry.And then make the empirical analysis to the performance of M&A.The conclusion is that different types of listed company have different performances.Horizontal merger and vertical merger perform better than conglomerate merger.In growing industry,horizontal merger gets the best.In mature industry, conglomerate merger does the worst.In declining industry,horizontal merger is a good choice in the long term.The conclusions are basically back up the hypothesis of 'Industry Life Cycle and Merger Type'.The conclusions of this thesis can also do favor to the M&A decisions of listed companies in China.