Characteristics About Control Rights To M&A Performance Of Private Listed Companies

M&A as an enduring activity on capital markets has been discussed by scholars as an object of study for nearly 30 years, its performance is influenced both by the macro-environment of economic and micro-environmental of enterprise. The development of control rights theories will undoubtedly provide the problem a new perspective. This paper discussed the relationship between them, and hoped that would come to a conclusion good for M&A market.This paper talked about problems as follows:First, after reviewed the former theories, we discussed the M&A performance of the private listed companies. And then, we related performance to its characteristic of control rights, analysed the effect of control rights, cash flow rights, and their separation to its performance. Second, we put forward 4 hypothesis, selected 45 private listed companies and designed a model to validate them. At last, we offered some advances according to the conclusion of the empirical analysis.In research methods, this paper selected 45 private listed companies that satisfy the conditions in Shenzhen, Shanghai stock market, and all of them got M&A taking place in 2005. With the using of database, network, as well as financial report of these companies, we has collected data, calculated the value of EVA from 2003 to 2008 for each sample companies. And then we considered the changes of EVA over different period with the characteristics of control rights respectively, there are four sets of data obtained, to be used to verify the hypothesis presented in the text.Through the study, we can get the following conclusions:At present, China's private listed companies get a short term growth in performance through M&A, but in the long-term perspective, this growth eventually come down. In other words, M&A did not lead to continued growth in performance to the listed company itself. However, the growing quantity of M&A could be ascribed to the ubiquitous agency problems between the ultimate controlling shareholders and the other shareholders, which behaved partly according to the control rights; generally speaking, it performs as the "violations-incentive-violations" effect. In the study, we hadn't find the performance of acquisition positively related with the right of cash flow, I think it is a result of the low level of the cash rights in the sample companies. And it also led to the impact of the separation to the performance after M&A inconspicuous. The study also found that the higher balance capacity of the second shareholder, the better of the performance after M&A. At last, it is worth mentioning that, in the second year after acquisition, the cash flow rights of the ultimate controller related to performance significantly different from annual. There is a significant negative correlation between them. This paper considers that this is why the subsequent performance of M&A falling instead of rising.The innovation of this paper is that, we used the EVA to evaluate the M&A performance of the private listed companies, and we found that the characteristics of control rights have a marked impaction on the performance, this impaction behaved differently in the second year after M&A.