Research On The Financial Risk Of Cross-border M&A Of Chinese Listed Corporations

Transnational Merger and Acquisition (M&A) is recognized as a complex and extremely difficult business transactions. In this procedure, enterprises may encounter many risks and the financial risk is comprehensive reflection of all sorts of M&A risks in value. Under the background of economic globalization, Chinese enterprises play an active role in the merger and acquisition tide. However, due to a lack of awareness about financial risk, Chinese enterprises have a high failure rate. Therefore, empirical study on identification, assessment and prevention of financial risk has a practical significance to Chinese listed enterprises.According to whether the risk is from transnational M&A, financial risks can be divided into internal risk and external risk, and this paper mainly analyzes four transaction links consist of the pricing, financing, payment and integration, as well as the financial risk they may bring, then analyze the connection between all kinds of risks and financial indicators.In the empirical study, samples consist of 63 Chinese listed companies which ran cross-border M&A in 2009-2013. First, use the Z-Score model to measure the sample companies’financial risks before and after the cross-border M&A. The empirical results show that Z value is yearly decreasing, so the financial risk continues to increase in the short term. Second, build the multi-factor regression model to research in the impacting factors of transnational M&A financial risk, and the result shows, in the M&A year, cash payment factor has a significant impact on enterprise financial risk; and in the next two years, cash payment factor and financial integration factor have significant impact on the enterprise’s overall financial risk. This result indicates that the choice of payment method and the control of financial integration is an important concern for enterprises to effectively guard against financial risks. Finally, the feasible precautions have been recommended according to the causes of the various aspects of financial risk.