A Study On The Influence Of Financial Constraint On Chinese Listed Companies' Cross-border M & A Behavior Selection

Financial constraints have a great impact on the whole process of companies' merge and acquisition activities.This paper will study the effect of financial constraints on M&A activities from two aspects: first,the relationship of M&A's absolute amount and relative scale to financial constraints;second,the relationship between financial constraints,the modes of M&A payment,and the performance of M&A companies.Consider that there is a variety of methods to measure the degree of financial constraint,and a variety of performance indicators different scholars have chose,the conclusions differ from each other,too.In order to study financial constraints in a better way,this paper constructs a new financial constraints index and a performance indicator.Using those two indicators,this paper measures the degree of financial constraints within Chinese listed M&A companies,and studies the relationship between financial constraints and other M&A influence factors.Firstly,the paper summarized researches on financial constraints,modes of M&A payment,and the performance of M&A companies.For financial constraints,this paper concluded basic theories of financial constraints,listed researches on the relationship between ownership,differences of financial environment and financial constraints,and methods to alleviate the problem of financial constraints.What's more,the paper concluded ways to measure the degree of financial constraint from two angles: cash flow characteristics and comprehensive index.For modes of M&A payment,this paper summarized different payments,and industrial and company characteristics factors which will affect company's payment decision.For the performance of M&A companies,this paper concluded researches of the the relationship amongst financial constraints payment,and other M&A influence factors.Existing researches shows that,divergences still exist on the effect of financial constraints to M&A accounting performance,and the effect of cash payment and stock payment.Secondly,this paper constructed new financial constraint index and company performance index.During the procedure of constructing financial constraint index,this paper used iFind database,picked up Chinese listed companies from 2011.1.1 to 2011.12.31,used company size and cash flow interest security multiple as foreordain grouping varieties,and chose ownership(SOE),debt-to-assets ratio(DAR),net cash flow generated by operating activities(LNOCASH),final cash equivalents(LNECASH)and ROA,by using Logistic regression,constructed a comprehensive index FCI,and made a simple analysis of Chinese outbound M&As.When constructing performance index,the paper just considered accounting index,chose ROA,ROE and EPS as varieties,and by using factor analysis constructed company performance index P.Thirdly,this paper picked up Chinese listed M&A companies in year 2014 as study objects,chose observing period from the year before M&A to two year after M&A,constructed three multiple regression models,to study the relationship amongst financial constraints,M&A absolute value and relative scale,modes of M&A payment,and the performance of M&A companies.There are two main conclusions: first,there exists a strong positive relationship between financial constraints and M&A absolute value.This conclusion reveals that small value M&As caused by financial constraints are not existing.What's more,large relative scale M&As are not good for company performance in short period,but will do good to company in the long run.Second,in short period,cash payment is not good for M&A company,but in the long run,non-cash payment is not good for company performance,and those phenomenon are much more remarkable among high financial constraint companies.Besides,focused on cross-border M&As,the paper conducted second round regressions.Different to the conclusion above,first,small value M&As caused by financial constraints existed among listed companies which conducted cross-border M&As,second,cash payment is not good for cross-border M&A companies all the time.The conclusions shows that companies should choose proper mode of payment according to their own risk and financial status,and their type of M&A activities..Finally,this paper summarized research conclusions,and posed suggestions to alleviate financial constraint from three aspects: external finance environment,policies and systems,regional and industrial development,and company itself.In addition,the paper put forward some improvement approaches in order to support further studies of financial constraint.