Research On Performance Of Diversified Mergers And Acquisitions In Agricultural Companies

In recent years,China's agricultural enterprises have embarked on the "non-agricultural" of the road for the impact of the agricultural industry characteristics and the increased international market competition,and the diversification of agricultural listed companies has become a common phenomenon in China's capital market.External mergers and acquisitions(M&A)and internal investment are the two main ways for enterprises to implement diversification strategy.Compared with internal investment,M&A can effectively avoid the technical threshold of the industry and the strict control of the government,and it becomes important means to implement diversification strategy for China's agricultural listed companies.Although M&A is an effective way for agricultural listed companies to enter new industries and realize industrial upgrading,there are significant differences in the effect of diversification of agricultural listed companies.Some enterprises have achieved the transformation and upgrading through the diversification of M&A,others are in the bad way for blindly diversified operations.The mainstream view generally supports that related diversification is much higher than non-related diversification in improving performance,but few studies explore the relationship between different types of diversification and firm performance from the perspective of M&A.This study collects 127 M&A events(including 67 M&A in the same industry and 60 diversified M&A events)from2001 to 2013 in China.First of all,it analyze the diversified M&A behavior of agricultural listed companies from the perspective ofcorporate characteristics;secondly,the diversified M&A was divided into related and non-related diversification of M&A,exploring the value effect of different types of diversified M&A.The results show that the prior performance of M&A is negatively correlated with the diversified M&A behavior,this means the companies with poor performance tend to choose diversified M&A.Free cash flow is positively correlated with the diversified M&A behavior,this means the companies with abundant free cash flow tend to choose diversified M&A.The value effect between related and unrelated diversified M&A are different obviously.The unrelated diversified M&A presents the trend of rising first and then decreasing.a general upward trend.Although the slight rise in the current period of M&A,after the acquisition of two more than the previous period decreased by 42.51%.The related diversified M&A presents a general upward trend.The slight decline in the current period of M&A,but after the acquisition of two more than the previous period increased by 43.56%.After controlling the relevant characteristics of the enterprise,the related diversified M&A has positive correlation at 1% significant level,whether with the overall performance of M&A,or after the acquisition of performance and post-merger performance of the two-stage return.This shows that the non-related has short-term value effect,and the related diversified M&A is more of long-term value promotion.