The Effect Of Different M&A Ontology In M&A Performance

As one of the most important ways to allocate resources in securitiesmarket, the efficiency of M&A has been focused by economists. Whetherthe merger and Acquisitions to create value, and how much to createvalue is the main index to measure the efficiency of the M&A. Becauseincrease the shareholders’ wealth is enterprise’s ultimate goal, therefore,many scholars believe that if after merger and acquisition, theshareholders’ wealth increased, so M&A is successful. For the listedcompany, the stock price related to the shareholders’ wealth, after theM&A of stock price changes also can explains the value of M&A, andindirect can show that the efficiency of M&A as a way to allocateresources. The event study method is based on this theory.If the stockprice can truly shows the value of enterprise, efficient market is anecessary condition, and then how to do if efficient market be questioned?So, another use financial indicator system to measure the enterprise valueresearch method was found. This method also can be used to test the performance of the M&A. Each methods of has its advantages, there is aquestion about which is better.Based on the study of predecessors records, in this paper improvedthe event study methodology and financial indicator methodology first.Then according to the subject of M&A, I based on the M&A data ofChinese listed companies in June30,2003-December31,2009, use theabove two methods respectively to research the performance of thecompany merger and acquisition. For the subject of M&A, thestate-owned enterprise has lower stock cumulative excess yields thanprivate enterprises’, the state-owned enterprise financial performance ismore stable and has risen slightly after the M&A, the private enterprises’financial performance has experienced first drop and then came up.Combined with market reflect analysis, the financial performance ofstate-owned enterprises in the M&A process didn’t decline because of ittendency through mergers and acquisitions to improve financialperformance, not economic strategy. Private enterprises are often moretendency to realize economic goals through mergers and acquisitions, rather than through the simple assets packing to realize the growth ofassets.Two kinds of research methods have a same result, in order to testwhether the two methods in the study other M&A performance issues. Istudy the influence of different financial situation before the M&A to thecompany’s performance. The results achieved together, if the companyhave financial distress before the M&A show a better performance thanthe financial condition good one. There is a little different, the companywhich have financial distress before the M&A show a higher CumulativeAbnormal Return(CAR). But the financial index system of which havefinancial distress before the M&A doesn’t better than the company whichfinancial condition good before the M&A so significant. Absolutemagnitude, the financial performance of the listed company which beforethe acquisition existence financial distress is lower than the companywhich before the acquisition does not exist the financial distress. Trendpoint of view, in the first years after the M&A two categories of listedcompany’s financial performance changes in opposite directions. After the M&A there are six quarters in the eight, the listed company whichbefore the acquisition existence financial distress have better growth. Thetwo differences results of research methods may be due to the followingreasons:1, The financial position of the listed company which before theacquisition existence financial distress is improved by M&A, promotedcompany values;2, The financial position of the company which beforethe acquisition does not exist has been reduced by M&A, declinecompany values;3, The main information source of market to evaluationthe company values is the company’s financial performance change, lackof more means to measure the value of the company. The maindivergence of two method is whether the market is effective, for sameissue the two method achieved together, this can say the market iseffective.