Market Structure, Horizontal Merger And Corporate Performance

At present, merger and acquisition has become one of the most active issues in the world economy, and the development of the M&A practice promote the study on M&A theory, including the M&A motive theory and the M&A value creation theory. The research of M&A motive theory have been recognized by both academics and industries and provide many merger practices a theoretical direction. However, the study of M&A value creation theory does not reach such an agreement, especially the majority of the M&A deals have been proved fail by empirical study of M&A. Why do so many failures existing in M&A deals? And what factors actually influence M&A performance? Based on the SCP analysis paradigm, this dissertation considers that the market structure affects M&A performance. According to the Theory of Industrial Consolidation by A.T.Kearney and game theoretical model, the study put forward that industry concentration, the quantitative indicator of market structure have an impact on M&A performance. Therefore, this study selects 231 A-listed companies with horizontal merger activity during 2002-2007 and divides them into 3 types on the base of industry concentration and industry characteristics, such as Disperse Group, Relative Concentration Group and Monopoly Group. After the empirical analysis of the impact of industry concentration on merger performance in overall samples and group samples through significant test and regression analysis, the following conclusions are finally reached: (1) Horizontal merger cannot improve performance like most of the other studies; (2) Horizontal mergers in scattered or monopoly (high concentration) industry environment have a better performance than the ones in relative concentration industry environment.