An Empirical Study On Asset Specificity And The Performance After Horizontal Merge And Acquisition

Asset specificity was usually used to study the performance after mergers and acquisitions together with vertical mergers.Most researches indicate that there has a certain correlation between asset specificity and the performance after vertical M&A.At present,there’s rare study about the relations between the asset specificity and the performance after horizontal M&A.This paper first defines the related concepts of asset specificity and horizontal M&A.Also review the related literature about asset specificity and the performance after M&A.Then expound theories of asset specificity and the performance after M&A.The author also put forward the research hypothesis of this paper.In empirical parts,the author selected horizontal M&A events which happened and completed in domestic during 2010 to 2012 as original sample.These events are derived from China’s M&A library in WIND database.The buyers of all these events are listed companies.The author eventually got 53 effective research samples after a series of screening and excluding.At first,the author analysis the change of asset specificity according to the descriptive statistics analysis method and examined the inclusion.The result shows that when horizontal M&A happens,listed companies in our country usually increase investment in research and development of specific assets to gain economies of scale and to obtain competitive advantage in the same industry.Then,the author of this paper chooses the performance of the first year,the second year and also the third year after M&A as the explained variable respectively.And select the asset specificity of buyers in the previous year of M&A,together with company size,debt levels,scale of mergers and acquisitions and cash ratio,etc.as explained variables.Then establish the formula between asset specificity and the performance after horizontal M&A through multiple linear regression models to explore the relationship between asset specificity and the perfornance of M&A.The results of empirical study show that the performance of the first year,the second year and the third year after M&A are all present the positive correlation with asset specificity.That is to say,the higher the asset specificity,the better the performance after M&A.At last,the author summarizes the research results of this paper,and provides some feasible suggestions for horizontal M&A in order to improve the performance after M&A.