A Study On The Performance Of The Foreign Merger And Acquisition Based On The DEA-Malmquist Indexes

Since we country established the policy of reforming and opening to the outside world in the eighties of the last century,China has actively attracting foreign direct investment to promote economic development.And most of them is greenfield investment.Until China joined the WTO in 2001,with the better economic,capital environment and the domestic legal policy environment,the number of foreign M&A(mergers and acquisitions) began to increase fast.The purpose of selling the shares of the domestic companies is to get more foreign advanced technology and management,to improve the overall productivity level of the companies.This paper will analyze the effect of M&A from the perspective of TFP(Total Factor Productivity),and get the performance of the foreign M&A,then we will provide some suggestions about the policy of foreign M&A for the enterprises and the government.In this paper we first analyze the influence to improve the productivity focused on five aspects including the technology spillover effect,bringing capital increment,making full use of the stock assets,along with import and export as well as through and the change of system.We will choose 45 companies occurred foreign M&A from 2003 to 2009 as the samples,then measure the change before and after the merger based on the DEA-Malmquist index method,then we will get the change of TFP.The result found that the TFP turned upward trend after the M&A while it was downing before the M&A.So the foreign M&A improve the TFP of the object company.When the TFP is decomposed into technical progress and technical efficiency,we can find that the improving of TFP is mainly due to the improving of the technical progress.Then we will compare the foreign M&A performance based on whether the foreign company become the first shareholder and their different countries and their different industries.The result showed that the performance is better when the foreign company become the first shareholder,the M&A performance of company from Asia is better than that of company from Europe and America,the M&A performance of high-tech industry is not good as the low technology industry or moderate level technology industry.