The Quality Of Internal Control,M&A Types And Performance

With the development of the economy and the fluctuation of the environment,internal control has gradually received the attention and attention of the government and the management of the company.A large number of research results show that internal control has a significant impact on reducing corporate risks.Since its inception,today’s internal control has become an important part of corporate management and an indispensable tool for company operations.And the failure of internal control is accompanied by the emergence of a series of problems in the company,including corporate bankruptcy,reduced performance,and poor financial performance.High-quality internal control can reduce the risk of the company and provide efficient operation for the company.So can the internal control of high-risk activities for corporate mergers and acquisitions exert its positive influence? Because mergers and acquisitions have three types of mergers and acquisitions: horizontal mergers,vertical mergers,and mixed mergers and acquisitions,the risk and motivation of companies in this different merger type are different.(1)Horizontal mergers and acquisitions of enterprises are often caused by fierce competition among their peers.On the other hand,horizontal mergers and acquisitions are carried out by growth companies in order to achieve the synergy effect of increasing the scale of a certain scale.During the intense period or growth period,the business risk of the company is relatively high.In the past,there were inconsistent conclusions about the impact of horizontal M&A on corporate value,which may have overlooked the importance of internal control quality in controlling corporate operating risks and improving corporate performance;(2)Due to the incompleteness of contracts,firms tend to perform longitudinal Mergers and acquisitions reduce transaction costs and achieve operational synergy by converting external transaction costs into internal transaction costs.However,the facts show that this kind of collaboration is not always successful.Vertical M&A will in turn generate new transaction costs.High-quality internal controls can send a good signal to suppliers,which is conducive to establishing commercial credits and reducing transactions.cost.In addition,high-quality internal control can also promote the integration of vertical mergers and acquisitions,thereby improving vertical M&A performance.(3)On the one hand,mergers and acquisitions often lead to mergers and acquisitions caused by agency problems,and the environment for mergers and acquisitions is complicated.The internal control can effectively reduce the agency problem of the enterprise through a strict check and balance mechanism,thereby promoting mixed mergers and acquisitions.On the other hand,high-quality internal control is the response of the company’s high management level and can promote the integration of mixed mergers and acquisitions,but According to theory of organizational experience theory,the company’s industry-specific management capabilities cannot be shared with the acquiree through mixed mergers and acquisitions.The difficulty of integration after mergers and acquisitions increases.Ultimately,the high-quality internal control of the acquirer does not promote the performance of the merger and acquisition.Therefore,based on the influence of internal control quality in mixed mergers and acquisitions,two assumptions are proposed.In the past,there were inconsistencies in the conclusions of the three types of M&A performance.Is this inconsistency because of the neglect of the impact of internal control quality on M&A performance? Does the quality of internal control affect all three types of mergers and acquisitions? Before being empirically confirmed,this is an unknown,and it seeks answers by studying the quality of internal controls,types of mergers and acquisitions,and merger performance.This article focuses on M&A activities and measures the performance of M&A with changes in total assets return rate and return on net assets.Due to the long-term impact of mergers and acquisitions on companies,most of the previous studies on M&A performance have used the performance of mergers and acquisitions for three years or more to evaluate the impact of mergers and acquisitions on companies.In order to study the impact of mergers and acquisitions on companies within three years,the 2011-2013 merger was selected.Success,transfer of control rights,data integrity,and mergers and acquisitions for the listed company’s companies for the sample study.Manually collect M&A type related information through the relevant definitions of transaction types and M&A types.According to past research,measure the M&A performance with ΔROA,and use the corresponding ΔROE as a robustness test,and use the multiple regression analysis to reach the following conclusions:(1)Internal control as The means of controlling risk does not promote the performance of different types of mergers and acquisitions;(2)The quality of internal control in horizontal mergers and acquisitions has a significant role in promoting the performance of mergers and acquisitions in the one year before and after the merger,three years before and after the merger,and the quality of internal control.The impact on horizontal M&A performance has passed a robust test.The previous inconsistency in horizontal M&A research may be due to the lack of consideration of the impact of internal control quality;(3)In the case of vertical M&A,the quality of internal control is one year before and after M&A Performance has a catalytic effect and passed the robustness test.It shows that the quality of internal control has a positive effect on vertical M&A performance.In past studies on vertical M&A performance,internal control quality was not taken into consideration.(4)In M&A,the quality of internal control of M&A had no significant effect on M&A performance.When the corresponding ROE measures the M&A performance,there is also no significant relationship between the quality of internal control and M&A performance.Research Inspiration: Previous studies on different types of M&A performance were inconsistent,possibly ignoring the importance of internal control quality.Enterprises should pay attention to the construction of internal control and,in combination with their own circumstances,firstly choose horizontal mergers and acquisitions and vertical mergers and acquisitions;enterprises should carefully choose mixed acquisitions according to their own circumstances,and when they perform mixed mergers and acquisitions,they can seek help from external professional organizations.The study enriched the literature on internal control quality,M&A types and M&A performance,and played a role in enlightening the company’s different types of mergers and acquisitions.