A Study On The Factors Affecting The Pricing Of Major Assets Reorganization In China 's Listed Companies

In recent years, the securities market of China has begun to take shape in its development. According to the latest statistics, by the end of December 2015, there are 2791 A-share listed companies in China, the overall market capitalization of which is about 52.96 trillion Yuan. With the expanding of capital market, the number of acquisitions augments year by year, particularly the securities market saw accelerated development following the stock reform in China in 2006. Between January 1st,2010 and December 31st,2015, there have been 571 material assets reorganization taking place in China’s A-share market, the total trading volume of which reaches 1.58 trillion Yuan. In the future, as China’s capital market opens further, trading activity is set to increase.Material assets reorganization, as a form of the capital market’s systematic operation, involves a variety of academic fields, while the value factors influencing the underlying assets in material assets reorganization are the research objectives of this paper. Currently, there is little study on the influencing factors of underlying assets in listed companies’ material assets reorganization in the academic circle, and commonly exists the confusion of underlying assets’final price and assessed price in listed companies.Significance of the research in this paper:first, through the correlativity study of factors influencing listed companies’ acquisition and reorganization, a theoretical exploration of the pricing mechanism for the underlying assets in material assets reorganization is presented. Correlation studies suggest:prices of similar or the same assets may vary with differing trading conditions in a single market. Such trading conditions contain trading subject, momentum, time constraints, and method, etc. Therefore, the final price of underlying assets should be the result of multi-dimensional, comprehensive consideration, rather than the assets’ assessed value merely. Secondly, in the context of the existing trade system and market circumstances in China, the study of valuation methods for the underlying businesses in listed companies’ material assets reorganization has some practical significance. On one hand, it helps the trading parties’ knowledge of the influencing factors in the valuation, overcome the blindness in acquisition, improve the room for trading parties’ gaming, and enhance the acquisition efficiency; on the other hand, as for investors, the identification of factors influencing the valuation can help their rationality in treating valuation premium, and the protection of their interests. Ultimately, for the regulatory authorities, such study can help the perfection of regulatory mechanism, the guidance for listed companies’ acquisition, and the optimization of social resources allocation.In the analysis of factors influencing the pricing in listed companies’material assets reorganization, three research methods are primarily adopted — the literature research method, the factor analysis method, and the correlation study method. First, through literature review, the paper carries out summary and classification of research results by previous scholars, including asset pricing, and acquisition motivation, performance, valuation, together with listed companies’stock valuation, etc. Based on large survey of the literature, the paper concludes the factors that may influence the price of underlying assets. In addition, data of relevance pertaining to listed companies is collected, in which variables that may influence the final price are quantified. Ultimately, through the correlation analysis of the variables and such prices, a test is performed, with conclusions drawn. In conclusion:Firstly, there is no correlation between the motivation factor and the price in material assets reorganization, and the purpose of such reorganization has no influences on underlying businesses’asset pricing;Secondly, in the category of enterprise factor, there are 5 variables that may influence such pricing, and all these variables have correlation with the final price of the businesses’asset. The variables are:the industry of the underlying asset, the capital property,equity concentration of listed companies, related business, and listed companies’capital return, which exhibits extremely strong correlation with the final price of underlying assets, but fails to interpret the final price’s fluctuations in correlation analysis;Thirdly, in the category of financial factors, there are 6 factors that may influence the final price of enterprise assets,4 of which exhibit correlation with the final price of underlying assets, being the assessed value, valuation method, profit forecast of underlying assets, and the payment method for consideration;Fourthly, in the category of market factor, there are 2 variables that may influence the final price of enterprise assets, among which "exchange sector of listed companies" exhibits correlation with the final price of underlying assets.In summary, the paper carries out an exploratory study of the correlation of factors influencing the acquisition, reorganization of listed companies. Among the 4 factors that have influences on the price of underlying assets in material assets reorganization, enterprise factor and financial factor exhibit high degree of correlation with that price, particularly the variable of "assessed value of underlying assets", which can interpret the final price’s 99.94% fluctuations during the observation period in which the sample data is collected. And this will provide reference for the study of the pricing mechanism for the underlying assets in material assets reorganization that takes place in China’s securities market.