M&A Performance Study Of China's Listing Corporation In Telecommunications Industry

In the background of economic transition and adjustment of industrial structure, mergers and acquisitions is developing rapidly in China on the support of the relevant policy, M & A behavior between enterprises has become increasingly active. M & A is the booster of the adjustment of industrial structure, and it plays a different role in different stages of enterprise life cycle. In developed countries, research on M & A started very early and developed quickly, while relevant study is lagging behind in China. Study on M & A especially that in specific industry can further improve the relevant theory, and provide a reference for the practice of M & A in China.This paper studies the case of M & A between Datang Telecom Technology Co., Ltd. and Guangzhou Entertainment Network Technology Co. Ltd in 2013, and the study mainly focus on the performance changes of acquiring firm before and after the M & A between these two companies. The structure of the article can be divided into six chapters. Chapter 1 mainly explains background and significance of the research, and it has a brief description of the research ideas and methods, and the main contributions and shortcomings. Chapter 2 introduces the theory of M & A, and summarizes and reviews the related research. Chapter 3 describes state of development of communications industry and the status quo of M & A. Chapter 4 is a brief introduction to the case of M & A between Datang Telecom Technology Co., Ltd. and Guangzhou Entertainment Network Technology Co. Ltd. In chapter 5, the performance of the M & A transaction is analyzed in detail. First, this paper analyzes the short term performance of M & A using the event study method and the market model, the empirical results show that the M & A behavior improves the short-term performance of the enterprises, the cumulative abnormal returns of the company's stock is up to 28.71% in 45 days before and after the merger announcement, which indicates investors are more optimistic about the M & A behavior in short term. Then, the article uses the financial analysis method to analyze the medium and long term performance of the M & A behavior. The results show that the long-term performance of the company has been improved after the M & A behavior, however, due to the smaller size of the Target Corp relative to the acquisition side, the impact to long-term performance of the buyer is limited. Finally, the article describes the overall impact of this merger behavior on the listing corporation, this acquisition behavior promotes balanced development of the company's four major business sector, reduces the company's operating risk, allows the company to expand new business quickly, and optimize the company's capital structure. Chapter 6 draws the conclusion and puts forward the related enlightenment, which points out that the enterprise should be clear about the motives of M & A and chooses the Target Corp reasonably when carrying out M & A activities. In addition, government departments should encourage and guide the telecommunications companies to strengthen the mergers and acquisitions in emerging areas, and improve the relevant investment and financing mechanisms to help enterprises completed mergers and acquisitions successfully.