Empirical Study On Performance Of M&As Of China's Listed Companies

Currently, the stock market has become an important place for resources allocation optimization. The M&As of listed companies are featured with large scales, strong social effects and involve large transference of human resource, material resource and financial resource. To the 2005, the M&As have been developing twelve years in China, and more than one thousand China's listed companies have promulgated the M&As activities. At the same time, on June 6th, 2005, Shanghai composite stock index dropped below the 1000-point level and fell to 998.23 points, returning to the starting point of 8 years ago. During the whole year of 2005, China's stock market was in a great depression which was worse than ever, investors in the Shanghai stock market and Shenzhen stock market were few and dealings shrunk, the average daily turnover was less than tens of billions RMB. In such market condition, whether the M&As would bring short time value for the companies is questionable. Moreover, as China, the stock market has not yet matured perfect, which makes some M&As activities have an obvious speculative, and therefore whether the M&As would improve lone time operating results of the companies have been questioned. So, to do some research on the performance of the M&As of China's listed company is really an important subject.On this issue, this paper makes short and lone time empirical analysis of M&As of China's acquiring companies listed on Shanghai and Shenzhen stock markets in 2005.First, this paper use the Event Method to analyze the average CAR (Cumulative Abnormal Return) for the acquiring listed firms in 2005. The analysis indicates: within the event window periods [-30 days, 20 days), the acquiring companies values had been increased. The average CAR within this event period was 1.5%,but it was not obviously in the T test, So the acquiring listed companies short time performance did not improved and the shareholders could not absorb cumulative abnormal return through the M&As activities.Second, this paper uses the Accounting Method to do the long time research for the acquiring listed companies. Within a longer observation period from 2003 to 2007, the financial condition of acquiring companies mainly showed a certain degree improvement in the following year, especially in the financial ratios which evaluated the operating performance and the growth abilities, but in the other part, the financial ratios about the debt risk were not very good, that maybe because the use of money to do the M&As activities made the companies to have more debt liabilities, so the acquiring companies should improve the risk control in the future. As a whole, the performance of the acquiring companies had been improved through the M&As activities, it should be favorable for the shareholders of the acquiring companies.At last, this paper uses the results of the demonstration analysis to give some advice for the development of M&As in the views of microcosmic and macrocosmic.