Research On The Influence Of Corporate Social Capital On M&A Behavior And Performance

As a means of resource reconfiguration,mergers and acquisitions have gradually become the normalization means of corporate strategy.Most of the existing research on mergers and acquisitions has been carried out from some formal systems,such as the characteristics of M&A transactions,industry factors,industry life cycle,etc.The influence of informal institutions such as social capital on corporate M&A activities is often overlooked.Since each company is in a large network of social relationships,its economic behavior is bound to be affected by informal institutions such as relationships,trust,and social networks,corporate social capital provides a new perspective for the analysis of economic activities of enterprises.In addition,with the support of national policies,many companies have started overseas mergers and acquisitions.Weichai Power is a model of success,and its M&A experience research can provide certain reference for related enterprises.Therefore,based on embedded theory,resource dependence theory,transaction costs and M&A theory,taking the M&A activity of Weichai Power in recent years as a research case,it explores the impact of corporate social capital on corporate M&A behavior and performance.The definition of corporate social capital in this paper is:the resources that enterprises have in their social networks that can bring value to enterprises and individuals.Based on the stakeholder theory,this paper mainly classifies the social capital of enterprises from four aspects:the relationship between enterprises and government,banks,suppliers and customers.Non-economic factors such as social relations between enterprises and banks,suppliers,and customers will be embedded in the M&A activities of enterprises.By providing more resources for enterprises and generating more favorable cooperative relationships based on trust commitments,The M&A behavior of enterprises has an impact,which in turn affects the M&A performance of enterprises.The measurement of M&A performance in this paper is divided into short-term performance and long-term performance.The measurement of short-term M&A performance uses an event research method to calculate the cumulative excess return rate from stock price fluctuations.The long-term M&A performance adopts the accounting research method,and uses the financial indicators such as profitability,solvency and development ability of the enterprise to analyze the long-term M&A performance of the enterprise.Among them,the sales net profit rate and the return on net assets are selected to analyze the profitability,the solvency is selected from the asset-liability ratio,and the development capability is selected from the income growth rate and the asset growth rate.By analyzing the cumulative excess return rate and the financial indicators for several consecutive years after Weichai Power’s merger and acquisition,it is observed whether the M&A performance is improved.Through theoretical analysis and case study based on Weichai Power,this paper argues that the social capital between enterprises and different stakeholders will have the following effects on mergers and acquisitions:social capital between enterprises and government can provide policy guidance for mergers and acquisitions,and use its political resources to provide information advantages for enterprises.Reduce information asymmetry and reduce M&A decisions and information search costs.The social capital between the enterprise and the bank can bring financing convenience to the enterprise,help the enterprise to improve the financing ability,and provide financial guarantee for the enterprise’s merger and acquisition implementation process.The social capital between enterprises and suppliers and customers can reduce the information asymmetry between the two parties.At the same time,based on the good cooperation and trust relationship,it can help enterprises to carry out vertical mergers and acquisitions with upstream and downstream enterprises,thus realizing the vertical integration of the industrial chain.,reduce transaction costs between enterprises.Through mergers and acquisitions,companies can also expand their market size,optimize their income structure,and increase their income and total assets.Therefore.as the heterogeneous resource of the enterprise,the social capital of the enterprise can provide more resource advantages for the enterprise,and affect the M&A performance by affecting the M&A behavior of the enterprise.In the short term,the company’s social capital provides policy support,financial support,and good earnings expectations for M&A activities,which causes the company’s stock price to rise,generating a positive cumulative excess return rate during the window period,which in turn positively affects short-term M&A performance.Impact;in a longer period of time,by reducing the cost of mergers and acquisitions and information search,providing adequate financial protection,reducing transaction costs between enterprises,expanding market size,optimizing income structure,etc.,thereby increasing the company’s income and profit levels and total assets,and ultimately It is reflected in the improvement of the company’s profitability,solvency and development capability,and positively promotes the long-term M&A performance of the company.This paper takes Weichai Power Co.,Ltd.overseas mergers and acquisitions as a case study.By analyzing the impact of social capital between Huichai Power and different stakeholders on M&A behavior and performance,the following conclusions are drawn:Corporate social capital influences M&A behavior In turn,it has a positive impact on M&A performance:government and enterprise social capital is conducive to promoting M&A process,reducing M&A decisions and information search costs,and government subsidies can increase the company’s capital income,which will have a positive impact on M&A performance;Bank-enterprise social capital is conducive to improving the financing ability of enterprises,providing financial guarantee for mergers and acquisitions,and improving the M&A performance of enterprises;supplier social capital helps enterprises to carry out vertical mergers and acquisitions,reduce transaction costs between enterprises,and acquire new technologies to improve the industrial chain.Increasing the income level of enterprises has a positive impact on M&A performance;customer social capital is conducive to promoting vertical mergers and acquisitions of customers,expanding the market size of enterprises,optimizing the income structure,increasing the total assets and income of enterprises,and improving the performance of M&A.Therefore,enterprises should pay attention to the cooperation and cooperation with the government,banks,suppliers and customers.These social relationships form the social capital of the enterprise.As the resource advantage of the enterprise,it will contribute to the successful implementation of the M&A activities and the development of the enterprise.Strive to lay the foundation.