A Study On Transnational M&A Risk Measurement And Management Of Oil Enterprises

Oil has been known as “the blood of modern industry ”, which not only has a wide range of economic use,but also is an important strategic resource,plays an important role as energy in our daily life with coal and electricity. With the continuous improvement of rapid economic development, Chinese demand for oil resources rising rapidly. As early as1993,Chinese domestic oil supply was unable to meet the needs of the domestic economic development and social life,China need to import large quantities of oil,and heavily depend on imported oil supply. At present,China is the second largest oil importer and the second largest oil consuming country of the world, Chinese dependence on foreign oil all the way up from 6% in 1993 to 59.5% in 2014,the national oil security is facing a huge risk.In this context,it becomes an inevitable choice for Chinese oil companies to go out and increase investment. Up to now,Chinese oil companies have invested in over 40 countries,with more then 100 overseas investment projects,brought back thousands of millions of tons of share oil each year, have made an outstanding contribution to China ’s economic construction. At the same time, Chinese oil enterprises meet a series of complex risks on foreign political,economic ….Therefor,how to measure and manage to foreign investment risk has become a priority.In this paper,the combination of theory and practice,theory and empirical analysis have been used. In view of the related theories of China and foreign countries, I made a comprehensive and in-depth discussion and analysis to measure and manage risks on the oversea investment of Chinese oil enterprises.First of all,we realize the risks factors about M&A abroad,include market risks,getting money in the market risks,tax law changing risks and so on; then measure the risks of oversea investment of Chinese oil company using the method---entropy of information, giving the degree of the risks factors, computing that getting money in the market is the important risks that we must take care of,management risks factors and business integration risks factors is also the important risks. On the risks management,I gives two methods to manage risks in different condition,using Miller-Orr mode and provision for impairment,providing a reference for overseas investment of Chinese oil companies to reduce risk and improve income.Through made multivariate linear regression model,compute that M&A International risks of oil companies waspositively correlated with Debt to Asset,and was negative correlated with net cash flow in investment activities,then puts forward suggestions on properly adjusting Debt to Asset and net cash flow of investment activities to control M&A International risks.At last,I advise on the good conditions that Oil companies can do well,including to strengthen intergovernmental dialogue,to improve M&A law,to strengthen cooperation with oil companies international,to train of M&A transnational talent acquisition.