The Study On Effect Of Product Market Competition On Mergers And Acquisitions

Mergers and acquisitions to promote a number of giant，super giant and big multinationalproduction and development，the rapid expansion and value-added asset scale，promote industrialupgrading and asset structure in optimizing the allocation of social scope， improve the efficiencyof scale economy of enterprises, which has a far-reaching influence on the history of thedevelopment in the global economy. While the product market competition as the company’sexternal governance mechanisms, will play its role in governance, thus affecting the company’smerger and acquisition activity. Starting from two research lines that product market competition-Merger and Acquisition type-Merger and Acquisition Performance; product market competition-Merger and Acquisition Performance, to study the impact of product market competition on theMerger and Acquisition Performance of acquiring company.In this paper,358has listed Corporation mergers and acquisitions as sample in china’sshanghai and Shenzhen in2007and2008.acquiring company and Target Corp in the industry arethe same, to define the type of M&A, associated compared mergers and acquisitions, or mergersand acquisitions into a diversified；select12financial indicators of building performanceevaluation system, use factor analysis to calculate the comprehensive score to measure theperformance of mergers and acquisitions. on this basis, through two routes to study the impact ofproduct market competition on Merger and Acquisition Performance, and to explore whether theproduct market competition can play a role in governance,as well as merger and acquisitionmotivation interpretation of merger and acquisition performance.The results show that:(1) the highly competitive industry, companies tend to mergers andacquisitions, less competitive industries，companies tend to be diversify acquisitions; in the sameindustry, competitive advantage of companies tend to M&A, in the fierce competition in theindustry, this trend is more obvious, in less competitive industries, this trend is not obvious; thehighly competitive industry, the effect of merger and acquisition type on merger and acquisitionperformance is not significant, less competitive industries, different influences of merger andacquisition type on merger and acquisition performance, short-term performance of the diversifiedmergers and acquisitions is better, long-term performance of related mergers and acquisitions isbetter.(2) a highly competitive industry, company M&A performance advantage in competition;the better the company’s current performance of mergers and acquisitions, affect the other duringthe competition status of performance is not significant; the fierce competition in the industry, theinfluence on M&a performance is not significant, competition is not fierce industry, the influenceof different types of M&A the performance of M&A, showed good short-term performance ofmerger and acquisition, the longer-term performance better.(3) the fierce competition can reducethe agency and hubris because motivation of M&A activity; product market competition as theexternal corporate governance, indeed, reduce the agency problem.(4) Obtained throughcompetitive position on the performance of arrogant managers hypothesis and free cash flowtheory has strong explanatory power on the performance.