A Study On The Short-term And Medium-term Performance Of Overseas M&A Of Chinese Listed Companies

Since the Reform and Opening, Chinese Mergers and Acquisitions (M&A) experienced embryonic stage, quantitative expansion stage and normal development stage. Until now, it has attained an unprecedented high degree both in quantity and amount. The success of overseas M&A not only lies in the completion of the transaction, but also depend on the effects after transaction. This thesis investigated the influence of overseas M&A on corporate performance, so as to provide decision-making reference for firms, investors, legislation and supervision departments.385 M&A events, from 2003 till now, of Chinese listed companies were collected from Wind Database as the research sample. In order to eliminate the interference of different events of the same company to the study results, the samples were filtered. Due to the huge amount of data and the various research interval of different samples, the author developed a data grasping program by using MATLAB software which can capture and sort stock price data and industry index data automatically.In order to research on the short-term performance, the author selected 224 samples and have event study on the cumulative average extra returns around their announcement dates. To make the measurement of extra return rates more accurately, industry index adjustment method was adopted creatively. Results showed that overseas M&A brought short-term excess returns to acquiring companies on the whole, but the influence on different industries varied. Overseas M&A brought short-term premium to manufacturing industry and wholesale & retail industry. However, it made the capital market performance of mining industry, financial industry, information service industry and entertainment industry deteriorate. After the segmentation of manufacturing industry, it was discovered that overseas M&A delivered excess returns to the other 7 sub-trades’ acquiring companies aside from the metal products industry, general equipment manufacturing industry and special equipment manufacturing industry.When studying on the medium-term performance,16 financial indicators of 59 sample enterprises in 3 years pre and post the announcement dates have been analyzed. The study found that overseas M&A improved the solvency of the acquiring companies, but let the profitability, the operating and growing ability decline to different degree. In order to measure the comprehensive financial performance, this thesis adopted factor analysis and used SPSS software to calculate the factor score and comprehensive score in each year. The empirical findings was that the comprehensive financial performance improvement occurred in and before the year of M&A transactions, but it has not been sustained. So generally speaking, the medium-term effects of overseas M&A of Chinese listed companies was not ideal.At the end of this thesis, the author put forward some suggestions separately for enterprises, agencies and government departments on the problem of industry difference of short-term performance and dissatisfactory of the medium-term effects.