Analysis On The Change Of The Corporate Performance Of China’s Listed Companies After The Equity Division Reform

With China’s economy developing very quickly recent years, the M&A activities of China’s listed companies have become increasingly frequent. M&A is a way to improve the resource allocation of enterprises, speed up the development of enterprises and over the past few decades, it has become an important way of self-development and expansion of the enterprises. Because of the equity division reform, state-owned shares and corporate shares don’t have good channels for circulation, thus making M&A activities through the secondary market become very difficult. Even if the buyer achieves the control of the target firm outside the secondary market, for example, through the protocol assignment, the change of the company’s share price has little impact on the non-tradable shares shareholder, due to the existence of equity division reform. So there is no lack of phenomenon in which many large shareholders hollow out the listed companies after achieving the control power, thus resulting in a lot of inefficient or ineffective M&A activities.With the implementation of equity division reform, the boundaries between tradable shares and non-tradable shares will gradually be eliminated, the setup of China’s capital market will gradually become standardized, and the improvement of the capital market will help establish the basis of M&A market; under this influence, the M&A activities of China’s listed companies are bound to have significant changes. What kind of influence this reform will bring to China’s post-merger performance, what factors impact the post-merger performance happening between the equity division reform and the full circulation, what changes will take place, whether there will be any differences, all of which will be discussed in this paper.This paper consists of297M&A activities happening between2003and2007, selects10financial indicators which reflect the post-merger performance, using factor analysis, T test and regression analysis method to analyze factors which influence the post-merger performance, performance before and after M&A activities, performance before and after equity division reform. Trough empirical analysis, we draw conclusions as below;1. In a certain extent, M&A activities are conducive to the improvement of corporate performance, but this improvement is significant only between2006and2007after equity division reform.2. On the whole, there are a lot of factors which affect the corporate performance:the higher the proportion of the tradable shares, the greater the post-merger performance; the higher the ratio of the shares held by the buyer, the greater the post-merger performance; the transfer methods (administrative allocation, protocol assignment or transfer of shares) significantly affect the post-merger performance; transaction size has a negative impact on the post-merger performance; related party transaction has a negative impact on the post-merger performance; whether reducing state-owned shares has a negative impact on the post-merger performance; whether happening after equity division reform has a positive impact on the post-merger performance.3. Comparing the regression analysis before and after the equity division reform, the factors which influence the post-merger performance don’t have significant changes.