The Research On The Relation Between Payment Method And M&A Performance

Mergers and acquisitions (M&A) of listed company always is the hot topic of domestic and overseas theory and practice at capital market. Weather M&A is a value creation action or not, it is the core concern of investors and scholars. In recent years, along with the adjusting of industrial structure, the enacting of policies and regulations and the changing of global economic environment, M&A are experiencing a stormrise, attracting extensive attention worldwide. After the split-share reform, Chinese capital market has realized complete circulation, diversification of the payment is attracting public attention. Within this context, the research of the effect of payment method on company value, both contributing to choosing a proper payment method, and providing references to the government and regulatory agencies on their decision of basic value orientation.Looking through the existing domestic and overseas literatures, the relation between M&A payment method and corporation performance always is a domestic and international focal issue. Has not yet formed an accordant conclusion, moreover, most research is limited in the studying of direct effect of M&A payment method on corporation performance, ignoring interaction effect of payment method and equity structure on M&A performance. Hence, by applying the classical theories of M&A, the paper is studying the direct effect of payment method and the interaction effect of payment method and equity structure on M&A performance through theoretical analysis and empirical research. On the one hand, this article wants to testify the applicability of international M&A theories in our country, on the other hand, expecting to has reference value to the decision of M&A payment of listed company under domestic special market environment and institutional setting.In this paper, by combining event study method with accounting method, conducting an in-deep and systemic study of the relation between payment method and the short-term and long-term performance for listed corporate. In the process of research, considering the specific ownership structure of post non-tradable share reform era, this thesis spreads out academic study from two aspects of direct effect and interaction effect, making a clear review on the relationship between payment method and M&A performance. The results of the study show that different payment methods really have significantly different effects on corporation performance, the share payment is superior to cash payment on both short-term and long-term performance. The empirical results indicate the existence of interaction effect of payment method and equity structure on M&A performance. Government-owned corporations employ share payment, the merging companies’ short-term market reaction and long-term operation performance are worse; the merging companies of highly concentrated equity can create wealth in the short run, however, damaging long-term business performance, because the false support of major shareholders.The innovation point of this paper is embodied in considering the specific ownership structure of post non-tradable share reform era, when exploring the connection of payment method and M&A performance, as well as conducting a research from two sides, there are the direct effect of payment method and the interaction effect of payment method and equity structure on M&A performance. Moreover, this thesis synthesize the research method of event study and accounting method, in order to clarifying the relationship between payment method and the short-term, long-term performances systematically. Additionally, taking other important factors of M&A performance into account over the course of the study, it is able to improve the accuracy of the results and practical implications.