The Research On The Effect Of Related And Unrelated Acquisitions On The Performance Of Acquiring Firms

Global M&A market has experienced six major waves of mergers and acquisitions. In Chinese capital market mergers and acquisitions have played greater roles as a result of their usefulness as a corporate tool to pursue larger size, faster growth in market share and for becoming more competitive through economies of scale.China's economy is facing restructuring and economic upgrading, M&A market thus ushers in a major development opportunity. With the promulgation of new regulations, mergers and acquisitions will also be a new matter, and the acquiring/merging firm is still most concerned about whether its original purpose can be achieved and whether a positive performance is obtained.This paper has attempted to investigate the impact of different types of mergers on the operating performance and transaction performance of acquiring/merging firms in the sample of M&As taking stock shares as underlying targets in the period of 2010-2012, using both the event study methodology and accounting measurements methodology.Through deep analysis and comparison with the samples group by industry relationship, the findings suggest that related acquisitions should have greater potential than unrelated acquisitions in both operating performance and transaction performance.It is worth noting that the unrelated acquisition sample firms is better than the related ones in the pre-merger operating performance and transaction performance.This suggests that their own conditions are taken into considerations before undertaking an acquisition and they are vital when a firm is trying to choose a related or unrelated target and then carry out an acquisition.The conclusions and findings provide a theoretical basis for acquiring firms,which is helpful to the selection of targets.