The Research On The Wealth Effect And Determinants Of The Cross-border Mergers And Acquisitions Enterprises In China

Now China is in new normality which the economic growth rate has fallen dramatically, and go out has become opportunities for China’s economic growth under the new normality. National Development and Reform Commission simplified the approval or ratification for Chinese enterprises foreign investment, which will boost the going-out dramatically. Analysts predict that there will be more domestic enterprises going out in the next few years. The increase of overseas merger and acquisition set us thinking-whether Chinese overseas merger and acquisition has create wealth and produce wealth effect, as well as how we can succeed in overseas merger and acquisition, namely what factors will affect the Chinese overseas merger and acquisition wealth effect. In this paper, these problems were deeply analyzed to provide guidance to micro-decision makers of mergers and acquisitions and macro-policy makers.Based on the samples of Chinese listed companies which have conducted overseas merger and acquisition from 2010 to 2014, Short-term wealth effect of Chinese acquirer was calculated with event study method, and Significance test was also applied with T-value test. In order to avoid clear problem of event window in calculation of long-term wealth effect with event study method, accounting indexes approach was applied to calculate the long-term wealth effect of Chinese overseas merger and acquisition acquirer. Ten financial indicators which reflect the sample enterprise wealth effect was factorially analyzed with Principal Component Analysis, and four factors was extracted to calculate Composite Score which can measure the long-term wealth effect and to do statistical Significance test. In order to further investigate the economic consequences of overseas merger and acquisition under the background of China’s specific system, the samples was divided into State-owned enterprises and private enterprises for investigation. According to the empirical study, Chinese overseas merger and acquisition have created wealth both terms and both types of enterprise. And they were significantly positive In statistical sense. To study the effect of various factors on overseas merger and acquisition wealth effect, in this paper theoretical framework of overseas merger and acquisition wealth influence factor was established, and regression analysis was carried out with Multi factor linear regression model. Following conclusions was obtained.(1) The wealth effect of acquirer will increase with higher correlation between acquirer and target, and will decrease with lower correlation;(2) Overseas merger and acquisition acquirer wealth effect will be larger for bigger enterprises;(3) Compared with other pattern of payment, cash would create higher wealth effect for Chinese acquirer;(4) Over-confidence of managers would undermine the wealth effect of acquirer;(5) The bigger the gap between acquirer and target, the less the long-term wealth effect of acquirer will be;(6) Various factors will have similar effect on State-owned enterprises and private enterprises.