Research On The Subject M&A Motivation And Performance Of The GEM Listed Companies

Promoted by knowledge economy and venture investment, the GEM(growth enterprise market), which was emerged in the1990s, experienced constant adjustment and innovation, and gradually developed into a investment and financing platform for startup enterprise with diversified development mode. Because the limited global listed resources, the GEM competition becomes increasingly fierce, then to accelerate the pace of development, and expand the capacity of the GEM market, and improve the ranking of the global GEM market is critical to the sustained and healthy development of our newly set GEM. Therefore, as one of two ways of company’s development, the mergers and acquisitions (M&A) will play more and more important role. However the topic whether there is value of M&A has been argued for a long time, this paper think that it is necessary to investigate the answer combined with the specific situation of our country.Reviewing the development course of M&A and the reform of our capital market, this paper argues that the subject acquisition will dominate Chinese M&A market in the future, and coupled with the industry characteristics and stage of development of the GEM, this paper considers that M&A will also become M&A mainstream of Chinese GEM. At the same time, also due to the above two characteristics of GEM, GEM subject acquisition mechanism will be inevitably different from with existing M&A theory. But at present there is not any research on GEM subject acquisition mechanism in our country. In order to offer more relevant experience in the future M&A practice, this paper investigated the motivation and performance of GEM subject acquisition through the research on the subject acquisition events happened in the past two years by theoretical analysis and empirical test for the first time. This is one of the innovation points of this paper.Firstly, based on a literature review of the existing M&A theory, this paper introduced the specific period and environment. Not only review research situation of M&A motives and performance, but also use the experience of research methods and variables. Then combined with the specific situation of Chinese GEM, this paper argued that motivation of GEM subject acquisition developed wider based on the application of existing M&A motivation theory. The collaborative motivation with purpose of growing fast was still the main motivation of the GEM subject acquisition, but GEM subject acquisition also had the unique motivation of M&A-style spending money. This is the second innovation spot.Finally, use the event study and model estimation method to operate empirical research on the performance of subject acquisition. Based on the above characteristics of the GEM, it is necessary to estimate multi-factor model. Empirical results of multi-factor model showed that there were two factors which influenced the performance of subject acquisition:whether the domain of two sides is same or not and whether executives resign or not after M&A. The most significant factor is whether the domain of two sides is same or not, which is different from other capital markets, and this is also an innovative point. To further test the results of multi-factor model, this paper operated sub-sample T-test, which showed the same results with the model.