Company Mergers And Acquisitions With The Life Cycle Of Listed Companies

The theory on the role of merger and acquisition over the life cycle of listed companies has two great schools-agency theory and neoclassical economics theory.The agency theory predicts that more mergers will be made when the company matures in the perspective of agency problems,and that such a merger would benefit managers by losing shareholder wealth.This is because that firm with more growth opportunities when it was younger,with the passage of time growth opportunities will be consumed slowly,under the condition of managers in a large amount of cash are reluctant to pay cash flow to shareholders,managers will choose mergers and acquisitions to maintain and increase the development of the company to make their own benefit.The neoclassical economics theory is standing on the scale of diminishing returns and maximize firm value point,it forecasts when firm young will make more mergers and acquisitions,in addition some model under the theory of the pie believe that mature company will make mergers and acquisitions.And the theory suggests that mergers and acquisitions will increase shareholder wealth.This is because on the one hand,firms with more growth opportunities early,because the company is decreasing return to scale,when their own to achieve the optimum size or turn to other company or industry have higher earnings,the company will choose to mergers and acquisitions to make full use of the scarce assets,such as growth opportunity,make the use of its higher efficiency and increase the value of the company.On the other hand,the model that predicts more m&a in the mature period is that the company may have more residual assets when it matures,so the company will make full use of it.Although the development history of m&a in China is not as long as in developed countries such as the United States,However,with the increasing degree of economic liberalization,internationalization and development maturity of China,the number and scale of m&a in China has shown a trend of continuous rise.More and more people are paying attention to m&a.Most of our research focuses on the research on m&a performance and value,and there is little research on the role of merger and acquisition over the life cycle of listed companies.Therefore,there is no comprehensive conclusion about China's m&a behaviors over the life cycle of listed companies,such as the regular relationship,formation mechanism and the wealth of shareholders.Based on the above theories and background,this article selects the m&a events between 1998 and 2016 that took place by listed companies in Shanghai and shenzhen stock market from 1992 to 2015 as sample,with IPO date as the starting point of life cycle of listed companies,from the three aspects involved in the theory in turn use APC model,counting model and event study method research mergers and acquisitions of listed companies and the life cycle of listed companies,namely,the relationship between m&a and life cycle of listed companies,the influence factors of mergers and acquisitions in life cycle of listed companies,and impact on shareholder wealth.And using multiple regression methods,such as basic APC model and replaced APC model,the negative binomial counting model regression and OLS regression,and the constraints samples(exclude the samples of the financial industry),and a variety of different indicators has carried on the robustness to the empirical test,the results are basically consistent.According to the empirical results,first of all,we find that the m&a rate has the relationship with the decline of the life cycle of listed companies.Secondly,the characteristics of the company,the industry factors and the economic situation factors all influence the merger behavior.Among them,growth opportunities and firm performance are significantly positively related to m&a rate,and m&a rate and interaction of growth opportunities and excess cash holdings doesn't exist significant negative correlation relationship,in terms of influence factors or mechanisms,it is strongly proved that it does not conform to the agency theory,consistent with the theory of neoclassical economics.Then,in addition to mature companies to pay in shares of state-owned companies mergers and acquisitions,other all different types of m&a characteristics mergers and acquisitions in China is to increase shareholder wealth,and most are significantly increased.The influence of shareholder wealth is in line with the neoclassical economics theory.Finally,three conclusions are consistent,we found that three aspects strongly suggest that the m&a behavior of Chinese corporates has its own regular relationship-m&a rate decline with the life cycle of listed companies,namely,the young company makes more mergers and acquisitions.It also proves that the actual situation of our country conforms to neoclassical economic theory from three aspects.