Internal Control, Capital Structure And M&A Payment

With the rapid development of economic society, the world economic integration has been the general trend, which resulted in the soaring expand of M&A transaction scale. There is no doubt that M&A has become an effective mean for the enterprises especially the listed companies to expand their living areas, allocate the existing resources and get more growth.For the emerging of M&A, the listed company is facing a new problem:How to select a payment that is accorded with their actual situation, appropriate and suite the enterprise’s long-term development. In fact, any enterprise involved in M&A cannot avoid the determination of payment. This problem has got profound analysis by Global academia, and obtained many theoretical achievements that worthy of learning. At present, the study on M&A payment in the western countries is relatively mature. But under the environment of domestic capital market, the study is still normative. And in our country, the empirical studies of it are not abundance and most of them are lack of practical value. In this essay, on the basis of the existing theoretical achievements of China and the West, we discuss the impact of internal control and capital structure on the selection of M&A payment. It provides some guidance on the choice and decision-making of M&A payment for our listed companies.This thesis use both normative and empirical analysis to study the current situation and influence factors of payment methods of China’s listed company. Focus on the influence of internal control and capital structure on the M&A payment from 2011 to 2014. This thesis includes the following seven parts:Part 1:introduction. It includes research backgrounds and significance of the thesis, introduce research methods and structure of the thesis as well as the major innovation points and deficiencies.Part 2:literature review. This section summarizes and makes commence on the research results of the domestic and foreign study literatures.Part 3:theoretical basis. This chapter firstly defines the concept of M&A, and then divides the payment methods of M&A into cash, stock and other payments. Other payments include assumed liabilities, assets and mixed payments. And then analyzes the features of each payment. After that, we define the concept of internal control and capital structure. Finally, this paper expounds the relationship between the payment method, internal control and capital structure, which provides an important theoretical basis of empirical analysis.Part 4:current situation. In this part, firstly we will make a brief introduction of payment methods of China’s listed companies and then explain the M&A scale and the current situation of payment methods.Part 5:model construction. In this section the relevant variables in the model are selected and the hypotheses of the research are put forward. Then the model is designed. This part prepared for the post empirical research.Part 6:empirical study. This section is the core of this thesis. Firstly, we decide our samples, then use the Descriptive statistical analysis to analyze the variables, after that, we use the correlation analysis and regression analysis to draw a conclusion of empirical findings.Part 7:advice. Finally the paper lists some recommendations on how to improve the methods of mergers and acquisitions payment methods.There are two main results in this thesis, one is normative research result, and another is empirical research result. Normative research result:First, corporate M&A activities have become increasingly active in China; the proportion of oversize M&A are increased gradually, medium scale is decreased, small scale is also declining; thirdly, cash is still the mainstream kind of payment method, and stock payment is gradually increasing; forth, with the deal price become higher, the choice of payment methods tends to be more diversify. Empirical research results: The merger samples have been selected strictly and analyze by the empirical analysis of multivariate logistic model, we get the following conclusions:The lower the internal control level, the more possibility of stock payment. The higher the asset-liability level, the more possibility of stock payment.The research results can guide the listing corporation to make more scientific decision when choosing the M&A payment method. However, this thesis has some shortcomings. It still needs further studying.