An Empirical Study On The Performance Of Merger And Acquisition Of Chinese Listed Manufacturing Companies

Since the global financial crisis in 2008, appreciation of RMB and bottleneck of export-led economy make listed companies within manufacture industry encountered unprecedented dilemma in recent years. To get rid of the dilemma, significant amount of listed manufacture companies use financial advantages to conduct mergers and acquisitions. Specifically, they can integrate upstream and downstream industry chain, in order to further control the production cost, in an alternative way, through the horizontal mergers and acquisitions, they can consolidate market forces, or through cross-industry mergers and acquisitions, they can achieve diversification and get rid of the potential risk that bought by main business. At the same time, as reforms in state-owned enterprises accelerated, related policies and laws improved, and intermediary institutions such as brokers developed, listed companies took financing advantages of stock market of A-share and as a result, amount of merges and acquisitions increased significantly.This paper used manufacture companies in A-share stock market, which conducted merges and acquisitions as research objects. According to certain standards, it selected 59 cases of merger and acquisitions to conduct empirical study. It firstly used event study to evaluate short-term performance, and then it applied financial ratios to evaluate their long-term performance. Based on the results, it further analyzed the main factors that influence their performance; at last it compared short term and long term influence factors.This paper concluded that: 1.Mergers make positive contribution to both short term and long term performance of companies. In terms of short term influence, the listed companies achieved higher cumulative abnormal return, which reflected positive attitude towards the merges from the capital market. In terms of long term influence, after two years of mergers, financial performance of the listed companies improved significantly. 2. Merger type do not affect merger results. This paper evaluated both long term and short term performance of merged companies, and it turns out that the influence is minimal. 3. Performance of state-owned shares is better than non-state-owned shares. Properties of equity affect performance of mergers and acquisitions, both in short term and long term. 4. Influence of associated business mergers and acquisitions on performance is inconsistent between short term and long term. Empirical study in short term showed that, associated business mergers can improve short term performance, while hinder long term performance.Innovations of this paper include: 1. It conducted specific research on China’s manufacturing industry after the global financial crisis in 2008. 2. Event study and factor analysis method was adopted simultaneously to evaluate both short term and long term performance, and a comparative study was also conducted. 3. It established an index system of manufacturing long term performance of mergers and acquisitions. In order to evaluate long term performance of the samples, it adopted factor analysis method. It selected eight financial indicators, and extracted four common factors that are significant.