Payment Of M&A And The Market Reaction

M&A(merger and acquisition), which is essential for the growth of companies, is a significant event for companies in their process of being bigger and stronger. So a comprehensive study on M&A has great significance on practice. Researches on M&A has been fully studied in western countries. However, as China is in the stage of emerging economical stages, in which the market mechanism is still in the process of continuous improvement and development, mature research achievements in Western markets are not fully adapt to and guide the development of our markets. Western scholars has made fruitful achievements on the study of the payment of M&A and there are also a number of domestic scholars who have noticed this research topic and focused on this research. However, there is no special M & A database in China. It needs certain numbers of human and financial resources to collect and collate a lot of data about M&A, so there are some limitations in the research of the payment of M&A.This paper makes use of Thomson Financial SDC Platinum Merger and Acquisition Database, which is a specialized global M&A database, to collect M&A samples,payment methods, and the market value of the acquirer and so on. And by reading the M & A transaction announcement of each sample,we manually collect each variable data about M&A, finally we get all data of this article. This paper selects the A-share listed companies in the Shenzhen Stock Exchange and the Shanghai Stock Exchange which successfully completed M&A during 2000 and 2012 as our samples. After carefully combing through each bulletin of samples, collecting the data of payment and transaction value, and checking the information of whether related party transaction or not, over-sea deal or not, diversified transaction or not, merging in the same province or not, merging more than one company in the same day or not, etc.And through conditional filtering, we finally get 1239 samples. This paper attempts to study acquirer market reaction from the point of payment combining with the different deal features and uses OLS to examine the influence of payment on the acquirer market reaction in Chinese market. The empirical results show that the shareholders of acquirer can receive significant positive abnormal returns, and shareholders tend to get positive returns which tend to zero in payment of cash, and When the deal is in payment of stock, shareholders of acquirer get significantly positive earnings.This study provides a theoretical reference basis for companies to make a more gainful decision on payment in the process of M&A and for investors to makereasonable decisions on investment, and also enriches our theoretical studies on the payment of M & A research.