Mergers And Acquisitions Performance Evaluation Of Electric Power Listed Companies Based On Refined Economic Value Added

Since2000mergers and acquisitions (M&A) have been becoming a frequently tradingactivity in China. Year2009the transactions reached232.3billion Yuan. Whether the M&A canreally create wealth for shareholders and improve corporate value? Therefore, the study of theimpact of M&A on firm performance has become increasingly important. Also, select a reasonablemethod to evaluate the impact is particularly important.As one of the typical business performance evaluation methods, economic value added (EVA),while considering the cost of capital, failed to reflect the company’s market value. Refinedeconomic value added (REVA) not only has the advantages of EVA, but also makes up EVA’sdeficiencies. First, this paper based on the compare of REVA and traditional methods, reachesconclusion that REVA can measure the true value of the enterprise. Second, selects12power listedcompanies that occurred M&A in2003as the study objects, analyses short-term performancechanges. Finally, collects financial data of Chang Yuan Company, calculates its REVA index from2001to2009, to evaluating short-term and long-term M&A performance.The results showed that: First, in the event of the year (2003)75%samples’ REVA indexsignificantly increased, compared to2002the average growth rate is51.20%, from short-term,M&A can improve business performance. Second, Chang Yuan Company’s REVA index showeda clear increasing trend within four years, from the short and medium term, Impact of M&A onperformance is positive; In2007, by the impact of Chinese stock market, leading REVA indexdecreased by157.14%; In2008, by the financial crisis, the REVA index linear declined by209.77%; Performance of corporate has been restored in2009, from long-term, the impact ofM&A on firm performance will be influenced not only by the enterprise itself but also by externalfactors.This paper evaluates M&A performance of electric power listed companies based on refinedeconomic value added, including horizontal comparison (2003) between12electric power listedcompanies, and vertical comparison (2003-2009) of Chang Yuan Company. REVA indicatorreflects the benefits of evaluating the true market value of corporate. At the same time, using REVA indicator to assess M&A, there are still some deficiencies, this can be complemented bymaking up other indicators.