Mergers And Acquisitions Can Alleviate The Financing Constraints Of Private Enterprises

The tide of enterprises M&A began at the end of the nineteenth Century in the United States.With the continuous development of the global economy,M&A is booming in the world,and enterprises in many countries become large multinational companies after achieving the goal of the expansion of enterprise scale,the extension of industrial chain as well as the diversification of business after M&A.China's capital market is relatively new compared with that in developed countries,but with the rapid development of China's economy,the capital market system also makes great progress,which makes a good platform foundation for M&A in China.In order to expand the management scale,improve efficiency and diversify business of the enterprise,the number of domestic M&A case is also rapidly increasing.As a very active part in the process of China's economic development,private enterprises are also actively involved in the M&A activities.At the same time,the financing constraint faced by private enterprises is one of the key factors restricting their further development.The problem of the existence of asymmetric information in the capital market,transaction cost and agency cost,resulting in a higher cost of external capital,and enterprises generally are faced with external financing constraints in the process of financing.The existence of asymmetric information transaction cost and agency cost in capital markets leads to the fact that the external financing cost is higher than internal financing cost.For a long time,China's economy is dominated by state-owned enterprises and the financing policy in China is inclined to large or medium-sized state-owned enterprises.Private enterprises are at a disadvantage in the financing progress,making financing constraints faced by private enterprises particularly serious.The relationship between financing constraints and corporate investment has been a hot topic in the field of economics.Whether the M&A can mitigate the financing constraints of enterprises is still conltroversial.Domestic researches on the relationship between M&A and financing constraints are not very rich and the studies which take private enterprises as the subject are also relatively insufficiency.Based on the investment theories and models of previous studies,this paper takes the private listed companies as the research object,and analyses the M&A data of listed private companies from 2010 to 2015 through descriptive analysis and multiple regression analysis in order to make out whether M&A can ease the financing constraints of private enterprises.This paper also explores the question that to what degree M&A can alleviate the financing constraints of private listed companies by making comparison with state-owned listed companies.And through the comparison with the state-owned listed companies,the paper analyzes the degree of financing constraints of M&A for private listed companies.The main conclusions of this paper are as follows:(1)Listed companies are generally faced with financing constraints,and private listed companies are confronted with a higher degree of financing constraints than state-owned listed companies.(2)After the completion of M&A activities,the financing constraints of listed companies have been alleviated.(3)M&A can alleviate the financing constraint of private listed companies to a higher degree than state-owned listed companies.(4)M&A can alleviate the financing constraint of private listed companies which are confronted with high financial constraints to a higher degree than those with low financial constraints.The innovations of this paper are as the following:firstly,this paper takes the private listed companies,a special subject of financing in China,as the object of study and explores whether the M&A can alleviate their financing constraints.Secondly,most of the previous studies only take the listed companies in manufacturing industry as study object.The research object of this paper includes the private listed companies in all industries except the financial industry,so conclusions of this study are more universal.Thirdly,this paper makes the comparison between private listed companies and the state-owned ones,then according to the results of the study.the last part of this paper put forward the corresponding policy recommendations.