The Empirical Study On Financial Flexibility,M&A Method Of Payment And The Performance Of M&A

Mergers and acquisitions,as an eternal topic in capital markets, is the most effective means to expand the scale of enterprises, optimize the allocation of capital and centralization. In recent years, with China's market economy development,mergers and acquisitions becomes more and more important.The choice of payment method is closely related to the acquisition performance. In addition, the company financial flexibility is reasonable to use the remaining cash and debt capacity to deal with the reserves of uncertain future events and to seize the investment opportunities that may arise in the future in order to achieve a comprehensive ability to maximize the value of the company.M&A is a large investment behavior of an enterprise, successful merger transaction depends on the ability of enterprises to raise the necessary funds, and the financial flexibility reserves of the enterprise beforehand can better fund their valuable investment opportunities. This article will apply financial flexibility to M&A event and discuss financial flexibility produce what kind of impact on the choice of payment method, and whether the level of M&A performance by different choice of payment method caused thereby to guide the company and according to the main its financial characteristics, choose the most beneficial development of the company after the merger of payment, thus enriching the study of financial flexibility theory and M&A theory.Based on the literature and theory,the financial flexibility situation of enterprises is introduced to the choice of payment.The results show that the higher the pre-merger financial flexibility reserve companies, M&A transactions tend to use the cash method of payment; facing shortage of financial flexibility, the need to retain some flexibility in the financial business, its mergers and acquisitions to pay way when making decisions, they tend to use stock payment. Also the empirical results show that M&A fair impact the company's market performance, there will be significant short-term wealth accumulation,and the performance of an M&A case with stock payment is superior to that with cash payment.China's M&A market's phenomenon can be better explained in financial flexibility theory, information asymmetry theory, capital structure theory and the special circumstances that China's capital market is different from western capital markets.