An Empirical Study On The Impact Of Internal Control Quality And Information Disclosure On M&A Performance

Since 2009,the whole M&A(hereafter referred to as merger and acquisition)market in China has been increasing continuously.After setting 'increasing mergers and reorganization force to lead industrial upgrading and transformation'as the development program of country,the scope of M&A is increased explosively after 2012.According to the data of China Venture database,the total amount of enterprises' M&A in 2014 reached to 2026.038 billion RMB,in 2015 reached to 7375.655 billion RMB,which rose for 264.04%than the last year.Therefore,2015 is also called as 'blowout year of M&A market in China'.From the analysis of the case of M&A failure,it can be found that ignoring the risk of M&A is one of the main reasons for the failure of M&A.It is well known that the essence of internal control is the control of risk.So whether can the good internal control and information disclosure help enterprise to control the risk of M&A,alleviate information asymmetry and then improve the M&A performance of enterprise?Along the train of finding a problem,analyzing the problem and solving the problem,reviewing relevant literatures and definitions of concepts,the author analyzed the mechanism of how the quality of internal control and information disclosure influence M&A performance.Based on the results of mechanism analysis,hypotheses were proposed.79 samples in M&A events of China from 2011 to 2012,with listed companies as acquirers,were taken as the research object.The relationship between the quality of internal control,information disclosure and M&A performance was studied.In our study,M&A performance was divided into M&A transaction performance and M&A integration performance.Key indicators were selected from four aspects to make a principal component analysis.Using DIB internal control index,the quality of internal control was measured.The disclosure of internal control information was measured,depending on whether internal control evaluation reports and verification reports were disclosed.By building a regression model,the hypothesis of relationship between the quality of internal control and information disclosure was tested.Through conduct descriptive and statistical analysis on M&A performance,internal control quality and information disclosure situation,this thesis finds that:(1)In the year M&A is completed and three years after,the performance is less than the year before M&A,meanwhile performance shows at first decrease and then increase trend.(2)The overall level of internal control index is relatively good,but the gap among enterprise is relatively big.(3)For internal control information disclosure situation,there are around half enterprises simultaneously disclose internal control self-assessment report and verification report,this shows that the disclosure of enterprise on internal control information is insufficient,should pay attention to it.In regression analysis,after control the size of the company,cash flow,financial leverage,M&A experience,growth and ownership concentration,this thesis finds that:(1)Internal control quality can have a significant positive impact on M&A transaction performance and M&A integration performance.(2)Internal control information disclosure can have a significant positive impact on M&A transaction performance and partial years of M&A integration performance.(3)In control variables,financial leverage and ownership concentration have significant positive correlation with M&A integration performance,company size and M&A integration performance have significant negative correlation.Upon research findings,policy recommendations were proposed.Our study argues that to improve the M&A performance of enterprise,M&A enterprises must strengthen the construction of internal control,improve the quality of internal control and intensify the disclosure of internal control information.