An Empirical Study On Performance Of M&A Of Listed Companies In China

Corporate merger and acquisition (M & A)is a main method for a company to expand capital and grow. Through M & A, a company can optimize its resources and it is a main way to lower cost and expand capital effectively. Not every M & A case can reach the expected results because M & A is complicated and varies. As stock and capital market is improving, and stock market becomes entire circulation, it becomes a important topic which draws companies'attention that how to achieve expected company expansion and improve company competency through M & A. But weather M & A can really increase shareholders profit and increase company profit and bring value to the society is a hot topic. Analyzing M & A in current economy situation in our country becomes very crucial and worthwhile.In western mature market, experts have done lot of research of the effect of M & A cases and it is believed that there is lot of uncertainties in M & A cases. At present, the economy situation in the country is changing, to assure that M & A market is alright is very important, and whether M & A is bringing profit for the company becomes a key topic that we will research on. As for this topic, I will use EVA theory and method to do a case study to offer suggestions for the company in or country to do M & A. M & A performances are the effect caused by M & A. In recent year, research on M & A results evaluation becomes a popular topic in the world financial market.In this essay, I will analyzed on different reasons of doing M & A and talk about M & A in our country first and then focus on M & A research method internationally. I will talk about the advantages and disadvantages of two main methods for investigating on M & A cases which are market stock price analyzing method and financial target analyzing method. And I will also talk about EVA target (Economy value added) method. EVA systematically shows a company's achievements, help on decision making in share holders and the company. Then I will take M & A case of some listed company from Shanghai and Shenzhen as example and calculate M & A company's EVA, EVAPC, EVA value during 2004-2008.The conclusion shows the following aspects of M & A effects.1. M & A is not helping the company who does it in getting profit. Normally a company that will be merged is low in capital, in bad economy condition and with some debt as well. It will be bad for the company's performance in a short term.2. Different way of M & A will result in different impacts on a company. Company that are merging asset company are adding economy value by M & A. Equity acquisition is more flexible compared to asset acquisition, because if the target company in not running well, it will be easier for the acquiring company to resell it, which is good for the acquiring company's operating performance.. Besides, acquiring companies will become the biggest share holders of its target companies, and those acquiring companies will not only consider the development of their target companies, but also their own interest. Therefore, operating performance will be better for those companies that are acquiring stock rather than asset from their target companies. Debt restructuring is normally being influenced by government behavior. When target companies are have excessive debt, and their operating performance is really very bad or even the company is going bankrupt, government might help to sell it in order to solve employment needs or reduce bad effect to the society. Operating performance will surely be affected in a short term.3. If the country is the biggest shareholders in M & A, it will bring positive effect for economic added value, while it will bring negative effect for economic added value if. A company that will have the best effect in M & A must be a company whose share is held by domestic natural persons. The main reason for this is thatShare issuing companies have better managing structure and efficiency while legal person shares company is not good in efficiency and management. As for performance, share issuing companies are comparatively better than legal person sponsored companies which are even better than state owned companies. I analyzed M & A in our country according the current situation and M & A value increasing theory and offered the following suggestions:1. The motives of M & A should have good impacts for the strategic long term goal of the company and resource integration should be effectively done after M & A.2. A company should choose a suitable way of M & A.3. Regulate government behaviors gradually in M & A.4. Build better M & A environment, invite more channels of financing and increase more financial supervision.