A Study On The Area Of Investor Protection, Association Property And Foreign M&A Performance

Merger&Acquisition is a hot topic in academia all the time. Whether Mergersand acquisitions can benefit from M&A and what factors affect the M&Aperformance are two fundamental aspects of M&A. In recent years, foreign scholarspay more attention to cross-border mergers. They study M&A performance from theperspective of the difference between merger and acquisition system, which makesthe investor protection degree varies from country to country. Because of China’s31province institutional environment differences,the degree of protection to investors ineach area will be different. In different regions of the M&A, can investor protection ofthe acquirer company really bring synergies to the acquirer company? Can investorprotection of the target company really bring synergies tothe acquirer company? Canthe difference between investor protection of the acquirer company and targetcompany affect the acquirer company’s M&A performance? For the acquirer company,will different nature of the property affect the investor protection on M&Aperformance in different ways? Will the M&A performance be different in the relatedacquisition and unrelated acquisition? Therefore, researching the area of investorprotection and related acquisition has important theoretical and practical significancein the different regions of the M&A.Paper chose the M&A performance, the area of investor protection andassociation property as object of research. First of all, this paper define the concept ofthe M&A and its’ performance, at the same time, the paper sorted the relevantliterature and theory. The area of investor protection means the corporate governanceto a certain degree. In addition, it represents the transaction costs and market friction.The acquirer company chose the target company for corporate governance or thetransaction cost-saving. In the different regions of the M&A, there are privateenterprises M&A based on market-oriented and state-owned enterprises which iscaused by local government for political interests. Given the nature of the property,the area of investor protection affect the performances of the M&A in different ways.So the nature of the property should be brought into the scope of research. Besides,the association property plays the role of the value damage or value creation, evenmakes no difference in different regions of the M&A, we will study further. Secondly, the paper chose the M&A events occurred in2009-2011as theresearch sample. It analyzed the area of investor protection and association propertyby empirical study. The study found the evidence that the area of investor protectionof the acquirer would not have a significant impact on the M&A performance,meanwhile, target’s area of investor protection was significant positively related toM&A performance. What’s more, when the target’s area of investor protection washigher than the acquirer’s area of investor protection, the M&A performance is greater.However, the above conclusion existed only in the private enterprise M&A. Inaddition, the study found that association property had no significant impact on theM&A performance.Finally, according to the empirical conclusions, from the perspective of the localgovernment, the paper gave the suggestion that how to realize the value creation ofM&A. From the perspective of the acquirer company, some suggestions should begiven to the acquirer company on the regional choice of the target company and howto improve the efficiency of M&A. From the perspective of small and mediun-sizedinvestors, the path forward should be clear for the investors who observe the growthpoint hidden behind the acquirer company.