The Research About Intra-group Transactions’Influence On M&a Performance Of Chinese Listed Company

Merge and acquisition activities have become more and more frequent since China capital market operated. However, most listed company performance after acquisition can’t increase consistently and stably. In the light of this phenomenon, domestic scholars make a lot of research about the influence factors of acquisition performance, including merger types, scale, industries and so on. But there is little research about intra-group transactions’ influence on acquisition performance. The effect of intra-group transactions can’t be ignored as it comes with China special split share structure. Not only capital market will be impacted, but also stakeholders will be involved.Intra-group transaction is a kind of way of resource allocation, it should be treated objectively. On the one hand, it may reduce relevant cost, increase information transparency and get synergies. On the other hand, acquisitions involved in intra-group transactions will be easier to be manipulated because of poor law environment in our country and strong speculation of connected transaction, which have a negative effect on corporate performance. In the view of our country20years merger development history, intra-group transactions obviously become an instrument for controlling shareholder to make illegal profit, with which large sum of financial problems in listed companies are relevant. Consequently, there is a significantly practical mean to make a study about how intra-group transactions will affect M&A performance.The article is based on listed companies in mergers and acquisitions in2008on Shanghai and Shenzhen stock market, collecting those companies’relevant data from2009to2011.Using descriptive statistics, correlation analysis and regression analysis to study the influence of intra-group transactions. Empirical analysis results show that intra-group transactions will have a positive effect on corporate performance in acquisition year, while this positive effect is hardly to continue. Corporate performance started to decline in different degree in long-term period. After considering the negative effect of intra-group transaction, our county should strengthen the supervision on intra-group transaction, constraining illegal activities.