Research On Influence Factors Of Mergers And Acquisitions Value Creation

With the development of economy, science and high technology, China’s economyis growing rapidly. Mergers and acquisitions (M&A) spread across the whole world, andbecome active in China’s economic market. Now, China has become one of the largestM&A market in Asia. Many listed companies are looking to enhance the competitivestrength through mergers and acquisitions, and create more value. Therefore, in order togive full play to the M&A synergies and create value for company, seize the maininfluence factors of mergers and acquisitions value creation is very important.Base on the research conclusions of scholars, the paper combines the theoretical andempirical approach to explain the basic concepts related to M&A value creation,including the meaning of the mergers and acquisitions, corporate value and the conceptof value creation. The paper discusses the basic theory of value creation: the undervaluedtheory, the synergistic effect theory, the value of transfer and redistribution theory,transaction cost theory, agency theory and the free cash flow theory. Then the thesis uses113mergers and acquisitions of listed companies in2008as the study sample, and buildsthe multiple linear regression models. Then use the rate of return on total assets ofoperating cash flow (CRF) to measure the mergers and acquisitions value creation. Afterthat use empirical analysis to find out the impaction of pre-acquisition cash flow,industry-related degrees, payment method, transaction size, payment premium,jurisdiction belonged, related party transactions, the nature of controlling shareholder andthe stake proportion of the largest shareholder.The empirical results show that: the main factors are industry-related degree andacquirers’ controlling shareholder nature. Mixed mergers and state-holding is moreconducive to mergers and acquisitions value creation. In addition, the payment method and proportion of the largest shareholder are impact the value creation. Pay in cash willoccupy a large number of funds and decrease the companies’ operating capacity,therefore is does not conducive to value creation. The over high ratio of largestshareholder will reduce the corporates’ value creation too. So, in mergers andacquisitions, the company should be more comprehensive, scientific and reasonable toestablish a variety of factors, which enables the company to create more value. Theresults of this paper have some different with M&A theory and previous’ conclusion. It ismainly due to the economic environment of the sample, therefore, the external macroenvironment cannot be ignored in M&A value creation research.