China Listed Company Merger And Payment Empirical Research

Merger and acquisition (M&A) is an important way for entities to expand rapidly and occupy the market share, and the payment-method for M&A is concerned more as one of the key factors which affect the success in M&A. Different payment-methods affect differently in the financing strategy, fund cost and the both sides of shareholders' short and long-term interests. The cash payment is the main payment-method for M&A in China, in recent 20 years, and the payment-method for M&A has shown a trend of diversifying with the share reform advance, which proposed new requests to the M&A theory development in China. How the new payment-method for M&A will impact both sides of shareholders' business performances? Which payment-method is more favorable to both? We see significance of studying these for both the M&A activity and the supervision to the M&A activity of listed companies. In addition, foreign scholars have concluded the relatively perfect M&A payment-method theories through research, but there is a gap in capital market and M&A payment-method between China and foreign countries, so studying the foreign payment-method theories and empirical research results are crucial, for we can find out whether we can apply their theories to the M&A activity in China, and thus make progress in M&A payment-method for listed companies.Based on the conclusion from the new methods and research results at home and abroad, whether the information and signal theory is applied to the M&A activity in China is verified by means of event study herein. The cash flow indicators which are not easily manipulated are applied to verify whether both sides of shareholders' operating performances being change by different M&A payment-methods in short term. At the same time, some advice about the M&A activity for both sides of shareholders and the listed companies is proposed according to the results of empirical test.First of all, some related M&A concepts are defined, and the domestic M&A payment-methods are compared with those abroad, then it comes to a systematical review of the results and progress of theories and empirical researches about M&A payment-method. Four research assumptions which will be verified are proposed in chapter 3, and then the data resource, samples and the research methods are expounded in detail. In chapter 4, 139 M&A cases selected from the Chinese listed companies in year of 2006 are chosen as the objects of study to be empirical tested.In this paper, the information and signal theory is proved useful to the M&A activities in China by results from empirical tests; M&A activities didn't impact both sides of shareholders' operating performances in year of 2006; the operating performances of shareholders of bidding firms declined by adopting stock payment, and other payment methods didn't impact the operating performances of both sides. Additionally, some experiential conclusions are summarized according to the test results.①Stock market responds in advance to the M&A news.②In short term after the M&A news released, the abnormal returns for shareholders of bidding firms is not significant.③The abnormal returns for shareholders of bidding firms brought by the cash payment, stock payment and the exchange of assets is not significant in short term; in a month after the M&A news released, the abnormal returns increase for shareholders of bidding firms is not significant by free assets transferring, but the decrease is significant by credit payment.④The abnormal returns increase for shareholders of target firms is not significant in short term.⑤After the M&A news released, the abnormal returns increase by cash payment and its decrease by credit payment for shareholders of target firms are both significant, but the impact to the abnormal returns is not significant by exchange assets.⑥The shareholders of bidding firms get more abnormal returns decrease than the shareholders of target firms by credit payment.Based on the empirical test results, some advice about payment methods is given at the end of this paper.