Empirical Study On M&A Performance And Driving Factors Using EVA-Data From Manufacturing Industry

Merger and Acquisition (M&A) is a prolonged subject of the capital market. Study on the M&A performance and driving factors of Chinese manufacturing listed enterprises is of great significance.This paper takes with 70 manufacturing listed companies with M&A in 2011 for the sample and examine the performance of M&A during 2010-2014. In order to prove the Economic Value Added (EVA)’s ability to explain the performance of M&A, this paper firstly constructs the traditional evaluation model by using factor analysis method, and tests the correlation between EVA ratio and the comprehensive score. Then this paper uses EVA to evaluate the M&A performance of the Sample Firms. This paper decomposes the EVA ratio to get three levels of indicators through the DuPont analysis method. Different performance groups are analyzed with Independent-samples T-test and Paired-samples T-test so as to understand the differences in indicators at all levels and seek out the important driving factors of M&A performance of manufacturing companies.The major conclusions in this paper are listed as follows. First, using EVA to measure the performance of M&A is as effective as using traditional financial index method. M&A does not improve the performance level of manufacturing companies, even reduce the ability to create value for the enterprise. Most of the enterprises with poor performance of M&A belong to the traditional manufacturing industry. Second, companies with different levels of M&A performance have a significant difference in Adjusted Investment Return Rate, but all companies’Weighted Average Cost of Capital increase after M&A. Performance-Improved Companies present a substantial increase in the Investment Turnover Rate in the year of M&A, while Performance-Damaged Companies are affected by the decrease of both Adjusted Operating Profit Rate and Investment Turnover Rate.