A Study On The Wealth Effect Of Overseas M & A Of Chinese Enterprises

Modern financial management object of “shareholder wealth maximization” has been widely accepted. In order to achieve this goal, investment is the most direct means of enterprises. Then the M&A(Merger and Acquisition), as one of the methods of investment,is an effective way to enterprises development. So the modern enterprises development can also said to be a history of M&A.Since the 20 th century, western countries have experienced five waves of M&A. In the waves, China as the largest developing country has became emerging power and actives on the stage of World Economy. Internationally, the rapid growth of Overseas M&A in China has attracted widespread concern. Especially after the subprime mortgage crisis, global M&A market mired in a deep malaise. But Chinese enterprises seized such a opportunity to widely absorb foreign high-quality resources that Overseas M&A frequently occurred with the rising of transaction amount and times. It became beautiful scenery in the global M&A market. Hence, the influence of Overseas M&A on shareholder wealth has always been one of the hot theoretical researches which scholars at home and abroad have made many theoretical and empirical studies.In 2014, the State Council issued the “opinions on further optimization of market environment of company M&A and restructuring” and emphasized to “the encouragement on market M&A and restructuring, and the realization of transferring property right and control power that are of trans-region and trans-ownership ”. The CSRS(China Secu Rities Regulatory Commission) also revised “management method of acquisition of the listed company” and “management method of significant assets restructuring of the listed company”. And they hope to regulate the behaviors of M&A, to improve the efficiency of resource allocation,and to enhance enterprise competitiveness. And introductions of these measures were expected to protect the interests of vast investors in M&A. However, it is still deserved to study whether M&A can really have a positive effect on shareholder wealth and bring benefits to investors or not.This paper is based on the theories of Cross-borde M&A and OFDI(Outward Foreign Direct Investment) and other related theories. And a typical case of Overseas M&A, which is selected from the phylogeny of WEICHAI POWER co.,ltd, is to be analyzed. After briefly introducing the situations of WEICHAI POWER co.,ltd and target company and choosing two cases of WEICHAI POWER co.,ltd Overseas M&A, the short-term change of stockholder wealth is analyzed by the event study, and the long-term financial performance is analyzed by accounting research methods. Finally, the effect of OverseasM&A on stockholder wealth will be tested. From the point of market reactions, Overseas M&A in 2009 made stockholder wealth increase at first and then decrease, whether that in2012 grow steadily. From the point of business performance, Overseas M&A benefit it’s improvement in some degree; the synergy effects is more apparent but is not continuous.Nevertheless, when compared with same industry, financial index is obviously better than the industry average.