A Study On The Impact Of Shareholding Structure On The Enterprises’ Performance Of The Tansnational M&A

Since the accession to the WTO, Chinese enterprises are actively participating inthe global economy. The scale of transnational mergers and acquisitions (M&A) hasbeen increasing day by day. There will definitely be trials and hardships to survive andachieve success in the fierce competition to China, an emerging market economy. In2008, the subprime mortgage crisis that originated in the United States made both theglobal virtual economy and real economy into a slump. A large number of westernenterprises have occurred capital chain ruptures and devaluation of the enterprises’value which may lower the entry threshold and the cost of the transnational M&A.Many Chinese enterprises see this crisis as a good opportunity to get entry into westerncounties and therefore have tightened the pace of transnational M&A.However, in the progress of transnational M&A, Chinese enterprises has not onlyencountered the challenges from the external environment, such as the politic andcultural risk, but also the challenges from the internal factors has exerted influence onthe performance of the transnational M&A, shareholding structure is one of theimportant internal factors. Our country’s enterprises has serious historical problemswhich has improved after the reform of non-tradable shares, however there are stillsome potential problems. The imperfect shareholding structure has inevitably affectedthe performance of the transnational M&A. The existing problems in the shareholdingstructure have brought a series of problems throughout the process of transnationalM&A which are principal-agent problem, the majority shareholders encroach onminority shareholders’ interests and the integration failure after M&A, however in ourcountry few studies have focused on this topic. On the basis of the research at home andabroad, this article chooses five factors of shareholding structure, the ratio of circulatingstock, the equity ratio of the first majority shareholder, the equity restriction ratio, thetype of the first majority shareholder and the ratio of management shareholding, as fivevariable quantities in order to study the relationship between the shareholding structureand the performance of the transnational M&A.This study adopts event study to analyze the relationship between the ratio ofcirculating stock and the short-term performance after the transnational M&A. We cometo a conclusion that the ratio of circulating stock and the short-term performance’sabsolute value has positive correlation which demonstrates the ratio of circulating stock amplifies the influence of the short-term declared performance. Use principalcomponent analysis to get comprehensive scores by reducing the dimension of thefinancial index system. Then analyze the relationship between the shareholdingstructure and the long-term performance of the transnational M&A by multivariateregression. It then come to conclusions that in the first year, the equity ratio of the firstmajority shareholder, the equity restriction ratio, the type of the first majorityshareholder and the ratio of management shareholding has no significant correlationwith the long-term performance of the transnational M&A, while in the second year, theequity ratio of the first majority shareholder and the type of the first majorityshareholder have significant negative correlation with the long-term performance of thetransnational M&A, the equity restriction ratio, the ratio of management shareholdinghave no significant correlation with the he long-term performance of the transnationalM&A. The empirical results demonstrate that the higher the equity ratio of the firstmajority shareholder is, the worse the long-term performance of the transnational M&Awill be. IF the enterprise’s first majority shareholder is non-state, it will get betterlong-term performance of the transnational M&A. Based on these conclusions above, Ipropose to reduce share ratio of the largest shareholder and promote the reform ofstate-owned shares in order to improve the long-term performance of the transnationalM&A, at the same time, emphasize on the cultivation of the institutional investors asideal assignee of the state-owned shares.