Efficiency Of Merger Target And Market For Corporate Control In China

The amount and volume of worldwide Mergers and Acquisitions have set new high in recent years, which draws great attention of the capital market. M & A is the effective means to improve corporate strategy implement and optimize the allocation of resources and is an important way to promote the optimization and upgrading of industrial structure. The first step of a success M & A is to recognize the target corporation accurately. Existing research usually started in the direct financial indicators or ratio indicators from a single input into a single output. That is why this article focuses on the efficiency of recognition of target corp. The author verified whether the efficiency can be used to recognize the M & A Target Corps, which means the relationship between efficiency and being merged. After that, the author verifies the efficiency of the Target Corp before and after the merge. Based on these, the article aimed to verify the effectiveness of China’s market for corporate control from the perspective of efficiency.This article takes the companies whose controller changed in 2010-2013 of China’s A-share market as samples. By means of DEA model, with the net fixed assets, net intangible assets, executive pay as input variables, operating income as output variables, the author calculated the company’s efficiency, used Logistic regression model to examine the relationship between the company’s efficiency and the M & A and verified whether the corps’ efficiency changed after M & A in T test.The author drew conclusions as follow:(1) the financial performance of the Target Corps in China A stock market is generally poor, but the efficiency is not generally low. After the grouping, the efficiency of the government’s leading M & A on the high side. (2) Target companies have the characteristics of high efficiency. The regression results show that the higher the efficiency, the more likely to be acquired and the government-led mergers and acquisitions have higher significance through the subdivision of M & A type. The reason might be that the government-led mergers and acquisitions is not punish inefficient management and target for expanding scale and improving benefit of the main body of M & A, as well as optimizing the integration of resources, improving the extension industry chain, playing a synergistic effect of industry and promoting the international competitiveness. On the contrary, the statistical results of non-government-led M & A are not significant. (3) China’s market for corporate control is not effective. The Target Corps in government-led mergers and acquisitions have already had high efficiency before the M & A, and the purpose of M & A is not punish inefficient management, so the change of the efficiency is not significant. The efficiency of non-government led mergers and acquisitions is relatively low, which makes the change more significant. However, the whole sample proves that mergers and acquisitions did not significantly improve the efficiency of the Target Corps. Combining target companies in the market for corporate control of China have the characteristics of high efficiency and M & A is not significantly improve the efficiency of the target company, so China’s market for corporate control is not effective up to now.