The Relationship Between Financial Flexibility And M&A Performance

Financial flexibility refers to the company to take effective action to change the amount and timing of cash flows and thus the ability which respond to the non-expected demand and seizing investment opportunities. As a comprehensive ability of the company’s financial system, financial flexibility has become an important way for the company to cope with market uncertainty and grasping future investment opportunities, also it is one of the hot research topics in the field of financial management at home and abroad in recent years. Existing studies have proved from the perspective of financing constraints, the investment efficiency and market competitiveness that financial flexibility has an impact on corporate performance.M&A events have always been key research object in the field of financial management. As a core issue of merger-related research, M&A performance issue can be described as the most important, but existing researches on M&A performance issues are all in varied methods and come to different conclusions. As a result, problems such as "whether emerging issues and key issues in the field of financial management be combined?","Does financial flexibility has a significant impact on M&A performance?" provide a new thought for the research of financial flexibility and M&A Performance. Based on this, the thesis is prepared to verify the relationship between financial flexibility and M&A performance from the perspective of M&A Financing.The thesis is organized as follows:The first part is the introduction, mainly to clarify the background and significance of the research, define the relevant concepts, clear the research content and method and a statement of innovation of the thesis;The second part is literature review. To review and summarize the studies on financial flexibility and merger-related issues from home and abroad, on the basis of this, carrying out the research of the thesis. The third part is the theoretical analysis and hypothesis deduction. From the perspective of financial distress cost, capital structure balance and M&A motivation as theoretical basis, carrying out theoretical analysis which support the empirical research using the thinking of " M&A financing-financial flexibility level-M&A performance", further deducing out the research hypothesis.The fourth part is the empirical study of financial flexibility and M&A performance. First set up the research model of event analysis and multiple regression analysis method, and define the main variables in the regression analysis; Then explains the data source and the sample selection process, and does descriptive statistics; Next, respectively, to verify the two assumptions which are put forward in the third part according by two parts empirical tests;The fifth part is the research conclusion, limitation and prospect. To analyze the empirical results of the fourth part and comes to the conclusion and puts forward corresponding policies and suggestions, summarizing limitations of the thesis, and prospecting research direction and development trend in the future.This thesis takes the531M&A events which occurred in Shanghai and Shenzhen stock markets of our country between2006and2010as sample, the study found that:(1) Compared to the acquiring companies which adopted debt financing, the M&A performance of the acquiring companies which used own funds is better;(2) Acquiring companies which adopted equity financing had no better M&A performance than those adopted debt financing or own fund ones;(3) Among the debt financing adopted acquiring companies, the ones which had higher demand for financial flexibility obtained worse M&A performance. On the basis of this, combined with the hypothesis deductive process and theoretical analysis, confirmed the financial flexibility and M&A performance are positively correlated.The innovation of this thesis is three main points:(1) Illuminates the impact effect of financial flexibility on M&A performance, expands the application field of the financial flexibility;(2) Taking M&A financing as the breakthrough point, combined financial flexibility and M&A performance issues in an organic way.(3) The comprehensive application of event study method and multiple regression analysis method. This thesis builds a bridge between the emerging research object-financial flexibility and the key research object-M&A performance in the field of Financial Management.