Research On The Influence Of Group Control On Enterprise Merger And Acquisition

With the rapid growth of the global economy,enterprise group,merger and acquisition(M&A)are quickly taking root in China.Now listed companies are becoming increasingly popular,and they have been in line with international standards and begin to mature.Whether in the process of single enterprise evolving into enterprise group or that of enterprise group expanding and developing,M&A always appears as a very important tool.It can be said that M&A as a link which embodies its efficiency and ability of innovation in the capital markets deserves much of the credit in the process of enterprise development.While much research has been done on single enterprise M&A,there is very few literature on enterprise group as the main subject to research enterprise group control on M&A behavior and mechanism.This thesis is a research from this new perspective.Based on the principal-agent theory,using listed companies of Shanghai and Shenzhen A-share non-financial companies listed on main board in the ten-year period of 2004 to 2013 as samples,this thesis does research on enterprise group control on M&A behavior and mechanism.The research has the following findings:(1)Compared to independent enterprises,listed companies that belong to the group of companies are more likely to have M&A again,which means that enterprise group control has a positive role in promoting M&A behavior.At the same time,among control variables,the scale of enterprises has a significant positive impact on M&A behavior.(2)Compared to independent enterprises,listed companies that belong to the group of companies are more likely to have M&A again with a scale larger than before,i.e.if enterprise merger and acquisition happened before,and when the merger and acquisition happen again,its scale is greater than the first merger of companies.In addition,control variables like corporate growth,combined title of two in one,asset-liability ratio and ratio of independent directors,etc.do not have notable influence.Whether or not it has enough financial support is the key factor to companies to decide its success of M&A.Hence,this thesis further surveys whether enterprises’ free cash flow has an influence on selecting merger and acquisition,i.e.to survey moderating effect of cash flow on M&A behavior.The research has the following finding:When cash flow is smaller,listed enterprise group which belong to state-owned enterprises is more likely to have recurrence of the enterprise M&A,i.e.group control plays a positive role in promoting enterprise M&A.On the contrary,when cash flow is bigger,it will weaken that effect.So it verifies that cash flow has a negative regulatory effect on group control and selecting of merger and acquisition.The conclusion of this thesis finds the enterprise group controlling effect and mechanism on M&A behavior.In order to increase the success rate and effectiveness of M&A,for both parties,before M&A behavior to select the main body of M&A,they should have a more rational,scientific and overall analysis and comparison so as to reduce the impact of adverse factors and choose a suitable target company which will be beneficial for both parties for further development and long-term achievement.Simultaneously,because of the impact of cash flow on M&A behavior,enterprises should have a more scientific plan to use cash flow and control the level of cash flow reasonably.Through the research of this thesis,it is discovered that finding problems and looking for effective ways to solve them so as to help enterprise groups to pay more attention to reasonable distribution of resources so that they will develop in a healthier way in the future,not only promote the healthy and stable development of enterprise groups,but also promote sustainable economic growth in China to better participate in global competition.