Performance Of Listed Companies In China's Automotive Industry Mergers And Acquisitions

Auto industry in China has come into a level of rapid development in recentyears. It does great contribution to national economic growth. As competitionincreased, problems generate gradually, M&A has become the inevitable requirementfor industrial structure adjustment. In the condition of international financial crisis,with policy encouragement, the M&A activities in auto industry came into an activeperiod than ever. However, the query on whether M&A could achieve profit forenterprises has a not certain conclusion yet. Further exploration on improvement ofenterprise performance due to M&A activities in China, especially in Chinese autoindustry is highly needed.The research is based on reviewing of M&A theories, and summarizing theM&A performance studies, and analyzing the current situation of auto industry and itsM&A condition. Empirical study on Chinese auto industry M&A performance in thisresearch is using financial index method, selecting enterprises had M&A activities inthis industry in Shanghai and Shenzhen stock market as samples, extract10financialindicators of target companies. Comprehensive evaluation system is set to measurethe comprehensive score. Data from one year before M&A to four year after wasstudied by factor analization. The results show that the automotive industry mergersand acquisitions performance improve in a short term, not in long termimplementation in target enterprises. The main impact is the international industrydeveloping environment, government’s intervention and the short-term focusing inM&A activities.According to the performance change, this paper presents some advice for notonly enterprises but also for policy formulation with hoping it could be helpful toenterprises and policy makers.