The Empirical Research On M&A Performance Of US Listed Chinese Internet Companies

With the rapid development of human technology, the rise of the Internet has changed the world dramatically for all aspects of people's life. From the traditional Internet to mobile Internet, from computers to smart phones, from online shopping to instant message, all of these allow humans feel the changes and convenience by the Internet. Due to the limit of China A-share market and the Chinese Internet companies profit mode, most Internet companies decide to list in the US. Listed Internet companies not only can fully enjoy the positive factors such as fixed placement and issuing bonds, etc., but also can allow the enterprises to obtain epitaxial growth by mergers and acquisitions. For more than four years working experience in one of three Internet giants(known as BAT) and one year investment experience, the author naturally considers using the Internet industry as the research object for deep study.This article firstly literature on M&A study to understand the theory and concepts to determine the basic research methods used in this paper. Then the status of the Internet industry as a whole was introduced as well as some sub-sectors of China. Lastly, M&A deals of Chinese Internet companies listed in the US were to conduct appropriate statistics.On this basis, the study chooses 10 financial indicators from four areas for factor analysis to research the changes of US-listed Chinese Internet companies quarterly, from 61 suitable acquisition samples, which were screened from 115 M&A cases from 2000 to 2013. Then the study gets the model and the performance scores. Thereafter the thesis uses the least squares method and stepwise multiple regression two methods to analyze the relationship between performance scores and 9 independent variables. In this study, the samples are analyzed not only as a whole, but also for different quarters and different industries. The thesis finally comes to the following conclusions:Firstly, after M&A, the Internet industry's overall performance showed a downward trend. It is particularly obvious in the first quarter after M&A. On the sub-sectors of games, search, e-commerce and portal websites, only the performance of games sub-sector is higher than in pre-merger level. In general, M&A deals do not enhance the performance for the Internet companies in the short term. Search sub-sector does not have the performance score due to the limited number of samples.Secondly, for the Internet industry as a whole, book value is a positive and largest impact factor on the performance. Historical market value, transaction size will partially affect business performance. The total number of shares becomes significantly negative correlation factor in three sub-sectors, but this factor is not significant impact on the industry overall. Positive and negative impact of the weighted average cost of capital is different in different industries. Book value, transaction size, transaction amount and other indicators also show the significant effect in some sub-sectors.In summary, the thesis, based on the factor analysis and two multiple regression methods, makes a thorough analysis of the performance of Chinese Internet companies listed in the US, providing a basis and reference for future M&A of listed Chinese Internet behavioral decision.