The M&A Performance Of Defense And Military Listed Companies In China

The defense and military industry is an important part of national economy in China.More importantly,it takes the responsibility of keeping national defense security and social stability.Therefore,its sustained and healthy development is of great significance to the socialist construction of China.Since 2015,China has issued a number of related development plans and policies that elaborate on China's defense and military industry and provide guidance on how to develop it.Those documents also clarifies policy support for accelerating the development of defense and military enterprises relying on capital market.As mergers and acquisitions are common means of optimizing the allocation of resources in the capital market,and the defense and military listed companies closely link the military industry and capital market,it has attracted increasing attention on whether these companies could improve performance through mergers and acquisitions.While there are few theoretical studies on this issue,and the timeliness is low.Therefore,this paper makes a qualitative and quantitative analysis on the M&A performance of defense and military listed companies in China,in an attempt to enrich and perfect the theoretical system of the field and make some feasible recommendations on China's defense and military industry as well.This paper firstly clarifies research background and significance;then draws up research approach,namely,qualitative analysis and quantitative analysis;and introduces the general structure of the article.Secondly,it summarizes the domestic and foreign literature on M&A performance;introduces the conception and categories of M&A;fatherly reaches conclusions about incentives of M&A and research of M&A performance.All these studies lay the theoretical foundation for the whole paper.Thirdly,this paper,qualitatively and quantitatively,discusses the general condition of defense and military listed companies in China and their M&A performance.Qualitatively,this paper selects 62 defense and military listed companies as study objects,analyzed aspects including business distribution,state of operation,the overall industry characteristics and overall situation of M&A.Quantitatively,this paper selects study samples from 62 defense and military listed companies which achieved M&A deals during year 2002 to year 2013,chooses their financial indicators,based on Du Pont analysis method,as variables.By factor analysis,the article builds performance evaluation function to evaluate the performance from one year before M&A to the second year after that.Through analysis,this paper discovers that the performance of defense and military listed companies in China gets a fluctuant ascending tendency after M&A indeed,and thus comes to the conclusion that under certain conditions,these companies could improve performance through M&A.In addition,this paper compares defense and military listed companies' M&A performance in regard with different motivations,industries,modes of payment,transaction scale and shareholding concentration,and explains the causes of differences.In the end,based on the whole research content,this paper puts forward the ideas that defense and military companies should reasonably plan and implement M&A to drive performance growth force;operate concentric diversification to achieve transformation and updating of business;operate capital diversification to achieve sustainable development;optimize equity structure appropriately to perfect corporate governance;also proposes that military and civilian integration strategy and the securitization of defense and military asset should be promoted from the perspective of defense and military industry development.Finally,the paper briefly summarizes the development and prospect of China's defense and military industry.