Empirical Study Of Financial Constraint, Payment Method And M&A Premium

As mergers and acquisitions(M&A) activity in the international market being more and more frequent, the Chinese M&A market also got rapid development, mergers and acquisitions in the past two years has reached into a new height. Along with the development of the wave of mergers and acquisitions, payment Method has been mature increasingly. Stock payment is playing an important role and gradually towards the history stage under a series of reform measures of China Securities Regulatory Commission. Cash payment still occupied the main position, the development of a variety of payment still need the further optimization of the market. Companies generally faced with the reality of financing constraints problems. Choosing what kind of M&A payment and whether in the face of financing constraints needs to be studied further.M&A is an important growth way of expanding the scale of the enterprise and develop fast. But a lot of M&A failures brought lessons to investors, and not all mergers and acquisitions could lead to the increase of shareholder wealth. Many M&A exist for the purpose of arbitrage. In pursuit of the completion of M&A, overpayment happens too much and it brings pressure to merger integration in the future. The existence of related party transactions has become an important factor influencing M&A premiums. This article launches the research from the angle of M&A premium and to some extent it explains the reason of the existence of invalid M&A.Therefore, this paper used Logistic analysis and regression analysis, researching the impact of financial constraints on M&A payment option from the cash payment and stock payment combined with the condition of financial constraints. Firstly, this paper study the overall M&A premiums in our country and then compare the premium of different payment methods. In the process to join moderating variable of related transactions, verify the moderating effect of related transactions and compare the relationship between payment method and M&A premium under different conditions. Finally, this paper discussed the combined effects of financial constraints and method of payment on M&A premium.This study samples are M&A events from 2008 to 2014. Based on the research, this paper has drawn the following conclusions. Companies with financial constraints tend to choose stock payment while companies without financial constraints prefer cash payment. The M&A premium is high generally in China, and the premium of related transactions is lower than unrelated transactions. In related transactions, stock payment premium is higher than the cash payment premium. In related transactions of mergers and acquisitions, compare with companies without financial constraints, the fact that stock payment premium is higher than the cash payment premium is more for companies with financial constraints. At the end of the paper, according to the research conclusion this paper puts forward several countermeasures and suggestions, and points out the deficiency of this article and the follow-up prospects.