Comparative Study On M&A Performance Of Chinese Listed Companies Before And After The Split Share Reform

Due to historical reasons, there were non-tradable shares and tradable shares in Chinese stock markets. The phenomenon of Split Share seriously affected the health development of Chinese capital markets and M&A of Listed Companies. Split Share made M&A market show many different characteristics compared with mature capital market, such as there were more financial M&A and non-fair associated M&A. With the gradual implementation of Split Share Reform and the progressive realization of "Full Circulation", capital market is gradually standardized. This establishes a foundation for market-oriented M&A behavior. In the context of "Full Circulation", the characteristics of Listed Companies M&A have undergone major changes. Strategic M&A is increasing, non-fair associated M&A is decreasing and so on. Domestic and international academic community has already done a lot of researches on companies’M&A. Among them, the performance of M&A is an important research area. However, most existing studies on M&A performance are based on the "Split Share" background, and the study based on the background of "Full Circulation" is still lack. Comparative empirical study on M&A performance before and after the split share reform is even fewer. Based on this, the study compares the M&A performance of Chinese Listed Companies in the contexts of "Split Share" and "Full Circulation". At the same time, in-depth research the M&A association attribute and the nature of the company’s impact on M&A performance,which has very important practical and theoretical significances.There are two main methods for M&A performance evaluation----Event Study and Accounting Study. In view of the domestic market effectiveness is insufficient, accounting study method has been widely used in China. This paper also uses accounting study method, but adopts the cash flow evaluation indicators to assess the M&A performance of Chinese Listed Companies, which are more reliable than the traditional accounting earning indicators. In this paper, basis of previous theory and research of M&A, select samples of M&A in the Listed Companies in2003and2008,which meet certain standards. Then using factor analysis by cash flow indicators obtain the composite score of acquired company’s financial performance. And use of comparative analysis concluded display that after Split Share Reform the M&A performance of all Chinese Listed Companies is better than before; Before the reform, M&A performance of Listed Companies is inefficient or efficiency is negative, but after the reform M&A performance performs well. Classification results show that before the reform the performance of associated M&A is poor than non-associated M&A; after the reform, the performance of associated M&A is better than non-associated M&A; Compared to non-associated M&A, magnitude of the impact of the reform on the associated M&A performance is greater; Whether before or after the reform the M&A performance of state-owned Listed Companies is poor than non-state-owned; Compared to state-owned Listed Companies, magnitude of the impact on non state-owned M&A performance by the reform is greater.According to empirical results, we should encourage, guide and regulate mergers and acquisitions of Listed Companies, in order to create greater social and economic value. Government, regulators, Listed Companies, intermediaries, the original non-tradable and tradable shareholders should take relevant measures to cope with the M&A in the background of "Full Circulation".