Institutional Environment,Bank-firm Relationship And M&A Payment Method

With the development of economic globalization,the world economy tends to integration,led to the number of mergers and acquisitions in the world growth rapidly,and mergers and acquisitions continues to expand the scale,M & A has clearly become an important means for enterprises to obtain the rapid development and to expand the scale.In the M & A transactions,one problem must pay attention to which is consideration style of mergers and acquisitions,since the 90 s of the 20 th century,with the rise of the global wave of mergers and acquisitions and capital market in the development of European and American countries better,various financial products,M & A payment types gradually become rich,M & a payment has been a huge change,mergers and acquisitions in the 1980 s by the payment cash payment changes for 1990 s form the stock and cash payment way have equal shares of the situation.In China,before the shareholder structure reform,due to policy reasons,enterprise M & a payment method is relatively simple,mainly in cash based,as mergers and acquisitions need to consume a large amount of free cash flow,making many small enterprises may abandon the mergers and acquisitions because of cash flow,however with the gradual completion of the shareholder structure reform,enterprise mergers and acquisitions cleared the obstacles in the system,our country enterprise M & a payment have increasingly diversified,enterprises can use the cash payment and stock payment etc.various forms to pay for M & A transactions on the price.The different methods of payment relates to enterprise internal and external financing,transaction cost and control dilution problem,how to select the appropriate and conducive to enterprise’s current and long-term interests of payment in mergers and acquisitions(M & A),enterprises need to choose according to their own conditions.The paper analyzes the M&A events of Chinese listed companies from 2007 to2012,we test two different Bank-enterprise relationship’s impact on the enterprise M&A payment option.We find that the company which has bank connection will tend to take the cash payment.Compare with the enterprise shareholding Banks(equity Bank-enterprise relationship),the executives of Banks background(trust Bank-enterprise Relationship)are inclined to take the cash payment.After further inspection which join the monetary policy and the level of regional financial development,we find that during the period of the monetary tightening and low levelof financial development in the region,the above conclusion remains valid.The results expand the research literature about the economic consequence of bank-enterprise relationship,and strengthen the understanding that the impact of China "informal social networks" on enterprise economic behavior,therefore provides a reference for the enterprise to select the M&A payment method.