Empirical Analysis Of Overseas M&A Performance Of Listed Companies In China

Chinese enterprises was still thriving in the financial crisis in 2007,so they could merge and acquire the overseas assets cheaply on after another. The quantity of overseas M&A by Chinese companies in 2013 had been more than 2.5 times of that in 2006, meanwhile the value had increased by 3 times. Chinese overseas M&A had attracted the attention of the whole world. But at the same time, we must concern that did our overseas M&A achieve expected effect. Chinese listed companies’ overseas M&A in 2007-2012 offer us plenty of samples. And private enterprises have gradually become the main force of Chinese overseas mergers and acquisitions. What’s more, the reform of the shareholder structure has made Chinese listed Corporations’ overseas mergers and acquisitions more market-oriented. All of these provide favorable conditions for the empirical study.In this paper, we empirical analyzed short-term market performance in windows period of declaration date of overseas M&A by CAPM. And we used BHAR Model to research long-term market performance within 36 months after declaration date. Meanwhile we compared operating cash flow returns before and after announcement day to investigate the change of operation performance. The results showed that Chinese enterprises’ overseas mergers and acquisitions to created shareholder value in short term. But in the long term business integration did not meet the expectations of investors, because abnormal return and financial performance was decreasing year by year within 3 years after M&A.Further investigating the factors that influence performance of overseas M&A, we found that Private enterprises’ M&A is really better than those implemented by State-owned enterprise, but the effect is not significant; under the same conditions, management ownership of listing Corporations’ performance of mergers and acquisitions is 30% higher than whose do not have ownership of listing Corporation; ownership concentration had no significant effect on performance, so there is no transfer of benefits. The M&As using acquiring corporations’ own capital is better in long-term debt or equity financing.According to the research results, we proposed the following to improve the Chinese enterprises’ overseas M&A performance: 1 、 The government should give private enterprises more policy support for foreign investment, and negotiate with host to increase the protection of corporate mergers and acquisitions. 2、Give more financial support, such as the relaxation of overseas financing channels and the reform of the domestic capital market. 3、Enterprises should pay attention to improve their own management ability. Do not blindly carry out overseas mergers and acquisitions, and can take the "progressive" acquisition strategy instead. 4、Equity incentive can cultivate the company’s management and staff the sense of ownership, which may a give great help to improve the performance of mergers and acquisitions.