Empirical Research On The Influence Of Equity Acquisition To Target Firms’ Market Performance

Recently, the adjustment of industrial structure and the economic structure transformation to the real economy has brought new opportunities and challenges, China’s capital market has more active acquisition. At the same time, the completion of the reform of non-tradable shares that hinder the healthy development of China’s capital market system barriers to basic cleared, which promotes the listed companies in China’s M & A market. After finishing the reform, equity mergers have become the main type of mergers in recent years. In present studies, scholars mostly focus on M & A’s influence on the acquiring firms’ market performance. There are not many literatures from target companys’point of view. Thus, it is worth to study wether equity acquisitions can create profits to target companys, what are the determining factors to target companys’market performance? The research results of these problem can deeply evaluate the performance of equity acquisition and its influence factors. This paper canprovide useful information for the acquiring firms’ management in practice, and it also enriched the theoretical achievements about the reseach of Acquisition Performance theories in our capital market.Firstly, this paper reviews the influence of the classical theory on merger performance. Then it analyzes some characteristics of equity and the acquisition of the target company’s current situation, which can provide an evidence to the further empirical research. In the empirical research, this paper choose targer companys in our A-share during 2010 to 2012 as samples. Using the CAR model, estimated short-term market performance of target companys in equity acquisition. Using the BHAR model, estimated long-term market performance of target companys in equity acquisition. The result shows that, equity acquisition raised our target companys’short-term market performance as well as the short-term market performance. In the short term, control-transfer and associated attributes have a significant impact on the market performance of target companys. In the long term, control-transfer, to obtain compensation, privatization of state-owned occur after lower industry-related and pre-merger management efficiency of M & A target company operating performance greater degree of improvement.The framework of this article is divided into following parts:the first part introduces the basic conceptsand the theory of M&A market performance. The second part summaries and analysis the current situation and tendency of the equity acquisition and the characteristics of the target company, which can provide an evidence to the further empirical research. The third part uses the event study analyzes and compares the mergers and acquisitions market share in both the short-term market performance and long-term market performance. The fourth part, regression analysis of the various factors that influence the acquisition of equity in target companies will be long and short-term performance, researches on the influence of different factors on the final performance changes. The last part draw the corresponding conclusions and policy recommendations based on empirical results. In this paper, a certain amount of limitations still exists, such as the study doesn’t take the macro-economic factors into account and the sample is not enough.