Predicting Takeover Targets Whose Controlling Stockholders Have Changed

Acquisitions that the controlling shareholders have changed is the most important one among the forms of acquisitions, if the company’s controlling shareholders changed, it means the company may have directional changes in business strategies, thus the company’s investors will have been impact significantly. In this paper, it studied what factors affect the probability of being the takeover target whose controlling stockholders have changed, and then explored whether the takeover target company can be accurately predicted. The purpose of this paper is to provide some reference to investors. The empirical research data is a seven-year period of2006to2012in Shanghai and Shenzhen listed company data, the2006-2010five-year data is in the sample data, and the2011-2012data is out of the sample data. This paper uses Logistic model to do research.This article refer to a large number of previous studies, collate the acquisition motivation theory, and in-depth studied the institutional background of takeover target whose controlling shareholders have changed. On the basis of previous studies, this paper come up with2assumptions and21financial variables. After eliminating the multicollinearity variables, the formal model retained14variables. The results of this study show that the return on equity (ROE) has a positive correlation with the possibility of mergers and acquisitions, reaching more than90%confidence level. Main business income of the logarithm (INCOME), total assets (ASSET) both have a negative correlation with the possibility of becoming target. Logarithmic of main business income’s coefficient is very significant, reaching more than99%confidence level. Tobin’s Q value of the target company do not have high corrlations with the possibility of becoming target. Liabilities to equity ratio (D/E) has a positive correlation with the possibility of becoming target. Working capital to total assets ratio (WORKING) has a negative correlation with the possibility of becoming target, the coefficient has a99%confidence. The total capital turnover rate (TTURNOVER) has a positively correlation with the possibility of becoming target, the confidence level is70%-80%. The coefficient of executive ownership rate (MANGER) is not significant, but has a negative correlation. The correlatin between ownership concentration and the possibility of becoming target is high, the index of the degree of ownership concentration has a significant negative correlation with the possibility of becoming target. Share liquidity is negatively correlated with the probability of being a target company. Representing liquidity indicators such as country shares in proportion (NATIONAL), the proportion of corporate shares (LEGAL), their regression coefficient is very significant, and negatively correlated to the probability of the target company. P value is small, the confidence level is reached more than99%, the wald value reached0.01significant degree. The correlation between proportion of circling shares (CIRCLE) and the probability of a target company is also associated, the confidence level of about70%-80%.From the model as a whole, including the set of variables, the model method of choice, the result is fairly fit, especially after the multicollinearity processing. This shows that, on a whole, the set of variables has a notable relationship with the possibility of becoming target.