The Impact Of Cross-border M&A Of Private Enterprises On Financing Constraints

With the world economy developing rapidly,M&A of corporate swept the world,Some Chinese private enterprises having a certain scale began entering overseas markets through cross-border M&A.However,private enterprises is lack of internal funds,and external financing channels are not convenient for them.Under the double pressure of imperfect market and information asymmetry,the financing constraints faced by enterprises in M&A become the key factors to restrict the development of enterprises.M&A events have accelerated the research on the relationship between M&A and financing constraints in academia to a certain extent,the literature research shows that M&A construct internal capital market,so that the funds are fully configured,but the academic community there is still having some controversy whether the M&A will affect the financing constraints,there has not yet formed a consistent view.Foreign scholars generally use investment-cash flow sensitivity theory by Fazzari,Hubbard,Petersen(1988)and cash holding-cash flow sensitivity theory by Almeida et al.(2004)to study the impact of corporate M&A on financing constraints.However,in the domestic,scholars do not have much research on this issue,most of them still stay in the study of the west,lacking of data to verify whether the findings are applicable in our country.Therefore,this article uses the empirical research method,and uses regression analysis and other empirical tools to try to explore whether the M&A will effectively alleviate the financing constraints faced by enterprises,and how the M&A affects corporate finance constraints,which is the core problem of this paper.This paper aims to investigates the impact of cross-border M&A of private enterprises on financing constraints,with the sample of cross-border M&A transactions of private companies which take place in 2006-2014,based on the investment-cash flow sensitivity model and cash-cash flow sensitivity model for empirical analysis,The main conclusions are: There are significant sensitivity of investment to cash flow and sensitivity of cash holdings to internal cash flow,which means that private enterprises are faced with financing constraints;After the M&A is completed,the cash flow sensitivity of the enterprise is reduced and the financing constraint condition is obviously improved;After the M&A,the scale of assets of enterprises expands,the total amount and proportion of tangible assets increase significantly,and the increase of collateral leading to improve the financing constraint level of enterprises.This is a reference value for the improvement of the system construction of the domestic listed companies and solving the financing constraints problem faced by the company.The paper is organized as follows: the first chapter introduces the research background and significance,research scope and purpose and innovation of this paper;the second chapter is literature review of corporate M&A and financing constraints,including the introduction of the concept of M&A and financing constraints,the theory of company M&A and financing constraints,and the effect of company M&A on its financing constraints;the third chapter is the study design of the impact of M&A on financing constraints,including the proposed research hypothesis,model selection,interpretation and sample variable selection;the fourth chapter is the empirical analysis of corporate M&A on financing constraints,relying on the theory of investment-cash flow sensitivity and cash-cash flow sensitivity;Last chapter is the summary of the research and policy recommendations.