Empirical Study On M&A Motivation And Performance Of Listed Companies In IT Industry

With the rapid development of global economy, the endogenous growth has become increasingly difficult to meet the rapidly changing market demands, while merger and acquisition(M&A) can help enterprises achieve the great-leap-forward growth. As an effective resource allocation pattern, M&A can not only realize the economies of scale, lower the production costs, avoid market entry barrier and quickly to gain market share. But also it’s a major tool for China to adjust the industrial structure and enhance the industrial efficiency. Western countries, among which the United States as a representative, have undergone through five big enterprise M&A waves, while in China, the M&A trend started in the mid-1980s and has grown in size and number as time goes by. Although the number and amount of M&A are surging, whether M&A can really create value has not yet been determined. Since it has a lot to do with various research methods, different viewing perspective and definition of performance among scholars. This thesis conducted a comparative analysis on business performance of China’s information and technology industry before and after their M&A, then attempted to reveal the motivation, performance of M&A of listed companies in information-technology industry and the relations between them.This thesis combines the literature research and empirical analysis method, focuses on the core issues of M&A motivation and performance. Also, with basis on a great deal of literature and related materials at home and abroad that the author has read, collected and analyzed. There are 35 acquiring firms meeting the research demand have been selected according to a specified method as objects of this study. They has been applied, through using the event study to calculate cumulative abnormal returns, thereby judge the motivation of M&A by the positive or negative cumulative abnormal returns during an event period of 10 trading days before and after the announcement day. After that, based on the financial figures of acquiring firms in the previous year, the actual year and the next two years after M&A, principal component analysis has been applied to study the long-term financial performance of the company.It has found that the M&A transaction of listed companies in information-technology industry did not create value for acquiring companies’ shareholders. Apparently, the performance of acquiring firms in the actual year and the next year has been deteriorating. What’s worse, it will turn to be negative and the declining tendency hasn’t changed significantly. In addition, the author did the significance test for descending degree of M&A performance of the overall sample, synergy-motivated samples and agency-motivated samples, indicating that most of them all passed the significance test of 5%. Meanwhile, the performance of acquiring firms based on the synergy motivation is better than that based on the agent motivation. Before M&A, the synthesis scores of the two kinds of companies are very close, while after the M&A, the performance score of the former is better than the latter. Unfortunately, the former failed to pass the significance test.