Research On The Relationship Between Financing Constraint,the Method Of Payment And The M&A Financial Performance

Mergers and acquisitions( M&A) has been widely recognized as an important way of an enterprise to achieve epitaxial growth and rapid growth, in recent years many famous enterprises have successively occurred M&A, no matter what is the model: the strong bullying the weak or powerful combination,enterprises are more and more aware of the significance of the M&A to the enterprises’ development. Now the latest wave of M&A boom is sweeping all over the world, Chinese companies will become the world’s major acquirer on the world M&A stage. As accelerating the industrial transformation, also an important node in the reform of state-owned enterprises, M&A is one of the ways can not be ignored. M&A payment method is the enterprise important financial decision, which affects the financial position and corporate value of the company after the merger.So selecting the best payment plan is the guarantee of successful merger. M&A performance is a report card submitted to investors and stakeholders and to test the results of M&A transactions, which is the key to the evaluation of M&A.So far there are a plenty of research achievements of M&A at home and abroad, which focuse on M&A behaviors, M&A performance and factors effecting the M&A performance. Some scholars take account of the financing constraints added to the framework of research on M&A, but mostly researchon financing constraints and cash holdings, efficiency of investment, M&A premium and so on, however the impact of financing constraints on M&A payment and the directly influence financing constraints on M&A performance the research results are rare.Therefore, in China’s capital market and China’s special background of social system, doing empirical research and analysis by selecting data of M&A in China, measuring index of financing constraints based on acquirers’ feature,putting financing constraints, M&A payment and M&A financial performance into the same framework, the research can rich existing empirical studies and play a significant role to our country enterprises’ M&A practice.In this paper, the initial study simple chooses the M&A acquirer side of Chinese listed companies who happened M&A affair during 2012-2014, the data involved in the five-year data of M&A transactions related to and financial data from 2011 to 2015. Financing constraints are calculated by making use of several financial indicators analysis with principal component analysis used to determine the weights of index. Event study method is used to calculate M&A events CAR(-60, 30). After calculating the financing constraint index and CAR, do Logistic regression on the influence factors of M&A payment, and multivariate linear regression on the influence factors of the performance of M&A.Draw the following four conclusions according to the results of the regression:( 1)the higher degree of financing constraints acquirers tend to accept share payment, high financing constraints companies tend to chooseshare payment way, low financing constraints companies prefer to choose the way of cash payment.( 2)the share payment has a positive effect on M&A financial performance. In China, although the share payment proportion is lower compared with cash payment, but there are gradually increasing trends,the advantage of share payment showing in the ascension of the M&A performance.( 3)between the level of financing constraints and M&A financial performance have a positive correlation. Financing constraints have a positive role in Chinese companies M&A performance, is more beneficial to realize the value of appreciation. Among controlled variables the nature of controlling equity shares is significantly negative, which illustrates the state-owned holding company has a negative effect on M&A financial performance. Top three executive compensation has significantly positive effect on the M&A financial performance, which shows the incentive mechanism gives executives’ subjective initiative full play, as a result that executives sufficiently consider the interests of the company from the M&A decision-making to the perform process.( 4)the high degree of financing constraints on the shares payment of companies M&A financial performance is higher than the cash payment.On the basis of the existing research of M&A academic research,innovation points of this study lies in:( 1)this paper choose research the relationship of the financing constraints, M&A payment method and M&A financial performance, from a new angle as the pointcut, which can provides theempirical data analysis results for the enterprise M&A, and gain some corresponding research enlightenments.( 2)compare the different research methods such as selection of single variable indicators, after analyzing the advantages and limitations of different measurement methods, this article selects which represents M&A acquirers last year’s profit ability, debt paying ability and the flow of the enterprise growth ratio such as asset-liability ratio,the net interest rate of the assets, rate of dividend payment, Tobin’Q five financial indicators, using principal component analysis to establish the financing constraint index measurement model calculation M&A acquirers’ degree of financing constraints, which is more objective and accurate way to measuring M&A financing constraints. On the measurement of index selection and calculation methods of financing constraints have certain innovation.