Operation Performance&Market Performance In Cross-border M&A Of Chinese Companies

The paper analyzes cross-border M&As of Chinese bidders during Jan.1,2000to Dec.31,2004. We test the operation performance and market performance of merging firms with the use of EVA and MVA, and study the factors affecting the performance with regression analysis.The results shows that, in three years after the cross-border M&As, the operating performance of the merging firms is not significantly improved, but damaged; Overall, the market performance of the merging firms have some improvement and the shareholder wealth increase; with the passage of time and the apparent role of the corporate merger integration, positive correlation between the EVA change and the MVA change becomes more and more significant.Different types of M&As lead to different operating performances. The post-merger operating performances of the electronics manufacturing and information technology enterprises, the state-owned holding enterprises, the merging firms with agreement for sale (equity) decline significantly; the enterprises’ post-merger perating performances of horizontal M&As, cash payment, equity payment don’t change significantly; the pre-merger and post-merger operating performance of associated transaction enterprise is positive and the second year after the merger is the best, while the performance of none associated transaction enterprises is positive pre-merger, but negative post-merger. In short, the state-owned holding acquisitions make the operating performance decline first, then rebounded; the agreement for sale (equity) make the performance decline, related transactions improve operating performance, and the horizontal M&As, the cash acquisition have no effect on the operating performance.The MVA change has a more and more significant negative correlation with capital expenditures after the M&A year, but has no significant correlation with working capital, operating margin, and WACC.The above empirical results show that cross-border M&As have not brought about the improvement in the operating performance to Chinese enterprises, but to some extent, improve the market performance and increase shareholder wealth. Meanwhile, the paper tests the impacts on operating performance and market performance, providing academic support for the implementation of cross-border M&As of Chinese enterprises and useful suggestions for government departments to develop relative policies.